Correlation Between Clean Seas and BKI Investment

Can any of the company-specific risk be diversified away by investing in both Clean Seas and BKI Investment 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 Clean Seas and BKI Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Clean Seas Seafood and BKI Investment, you can compare the effects of market volatilities on Clean Seas and BKI Investment 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 Clean Seas with a short position of BKI Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clean Seas and BKI Investment.

Diversification Opportunities for Clean Seas and BKI Investment

0.47

Correlation Coefficient

Clean Seas  BKI Investment

Very weak diversification

The 3 months correlation between Clean and BKI is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Clean Seas Seafood and BKI Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BKI Investment and Clean Seas 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 Clean Seas Seafood are associated (or correlated) with BKI Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BKI Investment has no effect on the direction of Clean Seas i.e., Clean Seas and BKI Investment go up and down completely randomly.

Pair Corralation between Clean Seas and BKI Investment

Assuming the 90 days trading horizon Clean Seas is expected to generate 1.23 times less return on investment than BKI Investment. In addition to that, Clean Seas is 1.46 times more volatile than BKI Investment. It trades about 0.13 of its total potential returns per unit of risk. BKI Investment is currently generating about 0.23 per unit of volatility. If you would invest  164.00  in BKI Investment on April 20, 2025 and sell it today you would earn a total of  16.00  from holding BKI Investment or generate 9.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Clean Seas Seafood  vs.  BKI Investment

Clean Seas Seafood

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Clean Seas Seafood are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Clean Seas may actually be approaching a critical reversion point that can send shares even higher in August 2025.

BKI Investment

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BKI Investment are ranked lower than 17 (%) 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.

Pair Trading with Clean Seas and BKI Investment

The main advantage of trading using opposite Clean Seas and BKI Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clean Seas position performs unexpectedly, BKI Investment 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 BKI Investment will offset losses from the drop in BKI Investment's long position.

The idea behind Clean Seas Seafood and BKI Investment 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.