Correlation Between KNOT Offshore and Lichen China
Can any of the company-specific risk be diversified away by investing in both KNOT Offshore and Lichen China 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 KNOT Offshore and Lichen China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KNOT Offshore Partners and Lichen China Limited, you can compare the effects of market volatilities on KNOT Offshore and Lichen China 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 KNOT Offshore with a short position of Lichen China. Check out your portfolio center. Please also check ongoing floating volatility patterns of KNOT Offshore and Lichen China.
Diversification Opportunities for KNOT Offshore and Lichen China
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between KNOT and Lichen is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding KNOT Offshore Partners and Lichen China Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lichen China Limited and KNOT Offshore 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 KNOT Offshore Partners are associated (or correlated) with Lichen China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lichen China Limited has no effect on the direction of KNOT Offshore i.e., KNOT Offshore and Lichen China go up and down completely randomly.
Pair Corralation between KNOT Offshore and Lichen China
Given the investment horizon of 90 days KNOT Offshore is expected to generate 4.85 times less return on investment than Lichen China. But when comparing it to its historical volatility, KNOT Offshore Partners is 3.17 times less risky than Lichen China. It trades about 0.03 of its potential returns per unit of risk. Lichen China Limited is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 136.00 in Lichen China Limited on August 28, 2024 and sell it today you would earn a total of 48.00 from holding Lichen China Limited or generate 35.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KNOT Offshore Partners vs. Lichen China Limited
Performance |
| Timeline |
| KNOT Offshore Partners |
| Lichen China Limited |
KNOT Offshore and Lichen China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KNOT Offshore and Lichen China
The main advantage of trading using opposite KNOT Offshore and Lichen China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KNOT Offshore position performs unexpectedly, Lichen China 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 Lichen China will offset losses from the drop in Lichen China's long position.| KNOT Offshore vs. USA Compression Partners | KNOT Offshore vs. Dynagas LNG Partners | KNOT Offshore vs. Crossamerica Partners LP | KNOT Offshore vs. Delek Logistics Partners |
| Lichen China vs. Genpact Limited | Lichen China vs. Broadridge Financial Solutions | Lichen China vs. First Advantage Corp | Lichen China vs. Franklin Covey |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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