Correlation Between BKI Investment and FOS Capital

Can any of the company-specific risk be diversified away by investing in both BKI Investment and FOS Capital at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining BKI Investment and FOS Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BKI Investment and FOS Capital, you can compare the effects of market volatilities on BKI Investment and FOS Capital and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in BKI Investment with a short position of FOS Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of BKI Investment and FOS Capital.

Diversification Opportunities for BKI Investment and FOS Capital

0.34

Correlation Coefficient

BKI Investment  FOS Capital

Weak diversification

The 3 months correlation between BKI and FOS is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding BKI Investment and FOS Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FOS Capital and BKI Investment is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on BKI Investment are associated (or correlated) with FOS Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FOS Capital has no effect on the direction of BKI Investment i.e., BKI Investment and FOS Capital go up and down completely randomly.

Pair Corralation between BKI Investment and FOS Capital

Assuming the 90 days trading horizon BKI Investment is expected to generate 0.19 times more return on investment than FOS Capital. However, BKI Investment is 5.36 times less risky than FOS Capital. It trades about 0.18 of its potential returns per unit of risk. FOS Capital is currently generating about 0.0 per unit of risk. If you would invest  167.00  in BKI Investment on April 23, 2025 and sell it today you would earn a total of  12.00  from holding BKI Investment or generate 7.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

BKI Investment  vs.  FOS Capital

BKI Investment

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BKI Investment are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, BKI Investment may actually be approaching a critical reversion point that can send shares even higher in August 2025.

FOS Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days FOS Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, FOS Capital is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with BKI Investment and FOS Capital

The main advantage of trading using opposite BKI Investment and FOS Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BKI Investment position performs unexpectedly, FOS Capital can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in FOS Capital will offset losses from the drop in FOS Capital's long position.

The idea behind BKI Investment and FOS Capital pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.