Correlation Between Knights Of and Kngt Clb

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

By analyzing existing cross correlation between Knights Of Umbus and Kngt Clb Larg, you can compare the effects of market volatilities on Knights Of and Kngt Clb 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 Knights Of with a short position of Kngt Clb. Check out your portfolio center. Please also check ongoing floating volatility patterns of Knights Of and Kngt Clb.

Diversification Opportunities for Knights Of and Kngt Clb

0.94

Correlation Coefficient

Knights Of  Kngt Clb

Almost no diversification

The 3 months correlation between Knights and Kngt is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Knights Of Umbus and Kngt Clb Larg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kngt Clb Larg and Knights Of 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 Knights Of Umbus are associated (or correlated) with Kngt Clb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kngt Clb Larg has no effect on the direction of Knights Of i.e., Knights Of and Kngt Clb go up and down completely randomly.

Pair Corralation between Knights Of and Kngt Clb

Assuming the 90 days horizon Knights Of Umbus is expected to generate 1.24 times more return on investment than Kngt Clb. However, Knights Of is 1.24 times more volatile than Kngt Clb Larg. It trades about 0.12 of its potential returns per unit of risk. Kngt Clb Larg is currently generating about 0.09 per unit of risk. If you would invest  1,246  in Knights Of Umbus on September 2, 2024 and sell it today you would earn a total of  870.00  from holding Knights Of Umbus or generate 69.82% return on investment over 90 days.

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

Knights Of Umbus  vs.  Kngt Clb Larg

Knights Of Umbus

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Knights Of Umbus are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Knights Of may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Kngt Clb Larg

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kngt Clb Larg are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Kngt Clb may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Knights Of and Kngt Clb

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

The idea behind Knights Of Umbus and Kngt Clb Larg 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.