Correlation Between KNOT Offshore and Pangaea Logistic

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Can any of the company-specific risk be diversified away by investing in both KNOT Offshore and Pangaea Logistic 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 Pangaea Logistic 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 Pangaea Logistic, you can compare the effects of market volatilities on KNOT Offshore and Pangaea Logistic 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 Pangaea Logistic. Check out your portfolio center. Please also check ongoing floating volatility patterns of KNOT Offshore and Pangaea Logistic.

Diversification Opportunities for KNOT Offshore and Pangaea Logistic

0.59
  Correlation Coefficient

Very weak diversification

The 3 months correlation between KNOT and Pangaea is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding KNOT Offshore Partners and Pangaea Logistic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pangaea Logistic 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 Pangaea Logistic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pangaea Logistic has no effect on the direction of KNOT Offshore i.e., KNOT Offshore and Pangaea Logistic go up and down completely randomly.

Pair Corralation between KNOT Offshore and Pangaea Logistic

Given the investment horizon of 90 days KNOT Offshore Partners is expected to generate 1.16 times more return on investment than Pangaea Logistic. However, KNOT Offshore is 1.16 times more volatile than Pangaea Logistic. It trades about -0.11 of its potential returns per unit of risk. Pangaea Logistic is currently generating about -0.14 per unit of risk. If you would invest  586.00  in KNOT Offshore Partners on November 2, 2024 and sell it today you would lose (26.00) from holding KNOT Offshore Partners or give up 4.44% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

KNOT Offshore Partners  vs.  Pangaea Logistic

 Performance 
       Timeline  
KNOT Offshore Partners 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days KNOT Offshore Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, KNOT Offshore is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.
Pangaea Logistic 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Pangaea Logistic has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

KNOT Offshore and Pangaea Logistic Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with KNOT Offshore and Pangaea Logistic

The main advantage of trading using opposite KNOT Offshore and Pangaea Logistic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KNOT Offshore position performs unexpectedly, Pangaea Logistic 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 Pangaea Logistic will offset losses from the drop in Pangaea Logistic's long position.
The idea behind KNOT Offshore Partners and Pangaea Logistic pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

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