Correlation Between Caravelle International and KNOT Offshore
Can any of the company-specific risk be diversified away by investing in both Caravelle International and KNOT Offshore 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 Caravelle International and KNOT Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caravelle International Group and KNOT Offshore Partners, you can compare the effects of market volatilities on Caravelle International and KNOT Offshore 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 Caravelle International with a short position of KNOT Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caravelle International and KNOT Offshore.
Diversification Opportunities for Caravelle International and KNOT Offshore
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Caravelle and KNOT is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Caravelle International Group and KNOT Offshore Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KNOT Offshore Partners and Caravelle International 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 Caravelle International Group are associated (or correlated) with KNOT Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KNOT Offshore Partners has no effect on the direction of Caravelle International i.e., Caravelle International and KNOT Offshore go up and down completely randomly.
Pair Corralation between Caravelle International and KNOT Offshore
Given the investment horizon of 90 days Caravelle International Group is expected to generate 7.67 times more return on investment than KNOT Offshore. However, Caravelle International is 7.67 times more volatile than KNOT Offshore Partners. It trades about 0.31 of its potential returns per unit of risk. KNOT Offshore Partners is currently generating about -0.21 per unit of risk. If you would invest 126.00 in Caravelle International Group on September 14, 2024 and sell it today you would earn a total of 112.00 from holding Caravelle International Group or generate 88.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caravelle International Group vs. KNOT Offshore Partners
Performance |
| Timeline |
| Caravelle International |
| KNOT Offshore Partners |
Caravelle International and KNOT Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caravelle International and KNOT Offshore
The main advantage of trading using opposite Caravelle International and KNOT Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caravelle International position performs unexpectedly, KNOT Offshore 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 KNOT Offshore will offset losses from the drop in KNOT Offshore's long position.| Caravelle International vs. Oceanpal | Caravelle International vs. Safe Bulkers | Caravelle International vs. Safe Bulkers | Caravelle International vs. Safe Bulkers |
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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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