Correlation Between Knight Club and North East
Can any of the company-specific risk be diversified away by investing in both Knight Club and North East 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 Knight Club and North East into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Knight Club Capital and North East Rubbers, you can compare the effects of market volatilities on Knight Club and North East 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 Knight Club with a short position of North East. Check out your portfolio center. Please also check ongoing floating volatility patterns of Knight Club and North East.
Diversification Opportunities for Knight Club and North East
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Knight and North is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Knight Club Capital and North East Rubbers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North East Rubbers and Knight Club 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 Knight Club Capital are associated (or correlated) with North East. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North East Rubbers has no effect on the direction of Knight Club i.e., Knight Club and North East go up and down completely randomly.
Pair Corralation between Knight Club and North East
Assuming the 90 days trading horizon Knight Club Capital is expected to generate 3.67 times more return on investment than North East. However, Knight Club is 3.67 times more volatile than North East Rubbers. It trades about 0.05 of its potential returns per unit of risk. North East Rubbers is currently generating about -0.03 per unit of risk. If you would invest 192.00 in Knight Club Capital on September 3, 2024 and sell it today you would earn a total of 44.00 from holding Knight Club Capital or generate 22.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Knight Club Capital vs. North East Rubbers
Performance |
| Timeline |
| Knight Club Capital |
| North East Rubbers |
Knight Club and North East Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Knight Club and North East
The main advantage of trading using opposite Knight Club and North East positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knight Club position performs unexpectedly, North East 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 North East will offset losses from the drop in North East's long position.| Knight Club vs. Jay Mart Public | Knight Club vs. Bioscience Animal Health | Knight Club vs. KCE Electronics Public | Knight Club vs. Sabuy Technology Public |
| North East vs. Sri Trang Agro Industry | North East vs. Jay Mart Public | North East vs. Com7 PCL | North East vs. Energy Absolute Public |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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