Correlation Between Knight Therapeutics and CTT Pharmaceutical
Can any of the company-specific risk be diversified away by investing in both Knight Therapeutics and CTT Pharmaceutical 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 CTT Pharmaceutical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Knight Therapeutics and CTT Pharmaceutical Holdings, you can compare the effects of market volatilities on Knight Therapeutics and CTT Pharmaceutical 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 CTT Pharmaceutical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Knight Therapeutics and CTT Pharmaceutical.
Diversification Opportunities for Knight Therapeutics and CTT Pharmaceutical
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Knight and CTT is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Knight Therapeutics and CTT Pharmaceutical Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTT Pharmaceutical 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 CTT Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTT Pharmaceutical has no effect on the direction of Knight Therapeutics i.e., Knight Therapeutics and CTT Pharmaceutical go up and down completely randomly.
Pair Corralation between Knight Therapeutics and CTT Pharmaceutical
Assuming the 90 days horizon Knight Therapeutics is expected to under-perform the CTT Pharmaceutical. But the pink sheet apears to be less risky and, when comparing its historical volatility, Knight Therapeutics is 2.9 times less risky than CTT Pharmaceutical. The pink sheet trades about -0.18 of its potential returns per unit of risk. The CTT Pharmaceutical Holdings is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 6.07 in CTT Pharmaceutical Holdings on August 29, 2024 and sell it today you would lose (0.27) from holding CTT Pharmaceutical Holdings or give up 4.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Knight Therapeutics vs. CTT Pharmaceutical Holdings
Performance |
| Timeline |
| Knight Therapeutics |
| CTT Pharmaceutical |
Knight Therapeutics and CTT Pharmaceutical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Knight Therapeutics and CTT Pharmaceutical
The main advantage of trading using opposite Knight Therapeutics and CTT Pharmaceutical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knight Therapeutics position performs unexpectedly, CTT Pharmaceutical 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 CTT Pharmaceutical will offset losses from the drop in CTT Pharmaceutical's long position.| Knight Therapeutics vs. Crescita Therapeutics | Knight Therapeutics vs. Cannara Biotech | Knight Therapeutics vs. Lowell Farms | Knight Therapeutics vs. Aion Therapeutic |
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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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