Correlation Between Covalon Technologies and Knight Therapeutics
Can any of the company-specific risk be diversified away by investing in both Covalon Technologies and Knight Therapeutics 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 Covalon Technologies and Knight Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Covalon Technologies and Knight Therapeutics, you can compare the effects of market volatilities on Covalon Technologies and Knight Therapeutics 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 Covalon Technologies with a short position of Knight Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Covalon Technologies and Knight Therapeutics.
Diversification Opportunities for Covalon Technologies and Knight Therapeutics
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Covalon and Knight is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Covalon Technologies and Knight Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knight Therapeutics and Covalon 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 Covalon Technologies are associated (or correlated) with Knight Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knight Therapeutics has no effect on the direction of Covalon Technologies i.e., Covalon Technologies and Knight Therapeutics go up and down completely randomly.
Pair Corralation between Covalon Technologies and Knight Therapeutics
Assuming the 90 days horizon Covalon Technologies is expected to generate 1.34 times more return on investment than Knight Therapeutics. However, Covalon Technologies is 1.34 times more volatile than Knight Therapeutics. It trades about 0.06 of its potential returns per unit of risk. Knight Therapeutics is currently generating about -0.02 per unit of risk. If you would invest 320.00 in Covalon Technologies on August 28, 2024 and sell it today you would earn a total of 25.00 from holding Covalon Technologies or generate 7.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Covalon Technologies vs. Knight Therapeutics
Performance |
| Timeline |
| Covalon Technologies |
| Knight Therapeutics |
Covalon Technologies and Knight Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Covalon Technologies and Knight Therapeutics
The main advantage of trading using opposite Covalon Technologies and Knight Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Covalon Technologies position performs unexpectedly, Knight Therapeutics 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 Knight Therapeutics will offset losses from the drop in Knight Therapeutics' long position.| Covalon Technologies vs. Resverlogix Corp | Covalon Technologies vs. iShares Canadian HYBrid | Covalon Technologies vs. Altagas Cum Red | Covalon Technologies vs. European Residential Real |
| Knight Therapeutics vs. Stella Jones | Knight Therapeutics vs. Richelieu Hardware | Knight Therapeutics vs. Element Fleet Management | Knight Therapeutics vs. ECN Capital Corp |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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