Correlation Between Knight Therapeutics and Benchmark Botanics
Can any of the company-specific risk be diversified away by investing in both Knight Therapeutics and Benchmark Botanics 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 Therapeutics and Benchmark Botanics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Knight Therapeutics and Benchmark Botanics, you can compare the effects of market volatilities on Knight Therapeutics and Benchmark Botanics 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 Therapeutics with a short position of Benchmark Botanics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Knight Therapeutics and Benchmark Botanics.
Diversification Opportunities for Knight Therapeutics and Benchmark Botanics
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Knight and Benchmark is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Knight Therapeutics and Benchmark Botanics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Benchmark Botanics and Knight Therapeutics 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 Therapeutics are associated (or correlated) with Benchmark Botanics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Benchmark Botanics has no effect on the direction of Knight Therapeutics i.e., Knight Therapeutics and Benchmark Botanics go up and down completely randomly.
Pair Corralation between Knight Therapeutics and Benchmark Botanics
Assuming the 90 days horizon Knight Therapeutics is expected to generate 39.35 times less return on investment than Benchmark Botanics. But when comparing it to its historical volatility, Knight Therapeutics is 19.46 times less risky than Benchmark Botanics. It trades about 0.02 of its potential returns per unit of risk. Benchmark Botanics is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1.10 in Benchmark Botanics on August 26, 2024 and sell it today you would lose (0.76) from holding Benchmark Botanics or give up 69.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Knight Therapeutics vs. Benchmark Botanics
Performance |
| Timeline |
| Knight Therapeutics |
| Benchmark Botanics |
Knight Therapeutics and Benchmark Botanics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Knight Therapeutics and Benchmark Botanics
The main advantage of trading using opposite Knight Therapeutics and Benchmark Botanics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knight Therapeutics position performs unexpectedly, Benchmark Botanics 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 Benchmark Botanics will offset losses from the drop in Benchmark Botanics' long position.| Knight Therapeutics vs. Rezolute | Knight Therapeutics vs. Tempest Therapeutics | Knight Therapeutics vs. Forte Biosciences | Knight Therapeutics vs. Dyadic International |
| Benchmark Botanics vs. Green Cures Botanical | Benchmark Botanics vs. Galexxy Holdings | Benchmark Botanics vs. Indoor Harvest Corp | Benchmark Botanics vs. Speakeasy Cannabis Club |
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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