Correlation Between Knight Club and Yong Concrete
Can any of the company-specific risk be diversified away by investing in both Knight Club and Yong Concrete 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 Yong Concrete 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 Yong Concrete PCL, you can compare the effects of market volatilities on Knight Club and Yong Concrete 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 Yong Concrete. Check out your portfolio center. Please also check ongoing floating volatility patterns of Knight Club and Yong Concrete.
Diversification Opportunities for Knight Club and Yong Concrete
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Knight and Yong is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Knight Club Capital and Yong Concrete PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yong Concrete PCL 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 Yong Concrete. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yong Concrete PCL has no effect on the direction of Knight Club i.e., Knight Club and Yong Concrete go up and down completely randomly.
Pair Corralation between Knight Club and Yong Concrete
Assuming the 90 days trading horizon Knight Club Capital is expected to generate 2.37 times more return on investment than Yong Concrete. However, Knight Club is 2.37 times more volatile than Yong Concrete PCL. It trades about -0.03 of its potential returns per unit of risk. Yong Concrete PCL is currently generating about -0.12 per unit of risk. If you would invest 400.00 in Knight Club Capital on November 3, 2024 and sell it today you would lose (200.00) from holding Knight Club Capital or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Knight Club Capital vs. Yong Concrete PCL
Performance |
| Timeline |
| Knight Club Capital |
| Yong Concrete PCL |
Knight Club and Yong Concrete Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Knight Club and Yong Concrete
The main advantage of trading using opposite Knight Club and Yong Concrete positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knight Club position performs unexpectedly, Yong Concrete 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 Yong Concrete will offset losses from the drop in Yong Concrete's long position.| Knight Club vs. Delta Electronics Public | Knight Club vs. Delta Electronics Public | Knight Club vs. Airports of Thailand | Knight Club vs. Airports of Thailand |
| Yong Concrete vs. Exotic Food Public | Yong Concrete vs. Knight Club Capital | Yong Concrete vs. North East Rubbers | Yong Concrete vs. Yggdrazil Group 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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