Correlation Between BK Technologies and ATT

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

By analyzing existing cross correlation between BK Technologies and ATT Inc, you can compare the effects of market volatilities on BK Technologies and ATT 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 BK Technologies with a short position of ATT. Check out your portfolio center. Please also check ongoing floating volatility patterns of BK Technologies and ATT.

Diversification Opportunities for BK Technologies and ATT

0.09

Correlation Coefficient

BK Technologies  ATT

Significant diversification

The 3 months correlation between BKTI and ATT is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding BK Technologies and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT Inc and BK Technologies 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 BK Technologies are associated (or correlated) with ATT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATT Inc has no effect on the direction of BK Technologies i.e., BK Technologies and ATT go up and down completely randomly.

Pair Corralation between BK Technologies and ATT

Given the investment horizon of 90 days BK Technologies is expected to under-perform the ATT. In addition to that, BK Technologies is 4.41 times more volatile than ATT Inc. It trades about -0.04 of its total potential returns per unit of risk. ATT Inc is currently generating about -0.13 per unit of volatility. If you would invest  1,722  in ATT Inc on January 29, 2024 and sell it today you would lose (47.00) from holding ATT Inc or give up 2.73% of portfolio value over 90 days.

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

BK Technologies  vs.  ATT Inc

BK Technologies

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BK Technologies are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, BK Technologies demonstrated solid returns over the last few months and may actually be approaching a breakup point.

ATT Inc

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with BK Technologies and ATT

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

The idea behind BK Technologies and ATT Inc 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.

Check out your portfolio center.

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 Global Correlations module to find global opportunities by holding instruments from different markets.