Correlation Between Knightscope and Marubeni
Can any of the company-specific risk be diversified away by investing in both Knightscope and Marubeni 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 Knightscope and Marubeni into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Knightscope and Marubeni, you can compare the effects of market volatilities on Knightscope and Marubeni 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 Knightscope with a short position of Marubeni. Check out your portfolio center. Please also check ongoing floating volatility patterns of Knightscope and Marubeni.
Diversification Opportunities for Knightscope and Marubeni
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Knightscope and Marubeni is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Knightscope and Marubeni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marubeni and Knightscope 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 Knightscope are associated (or correlated) with Marubeni. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marubeni has no effect on the direction of Knightscope i.e., Knightscope and Marubeni go up and down completely randomly.
Pair Corralation between Knightscope and Marubeni
Given the investment horizon of 90 days Knightscope is expected to generate 3.2 times more return on investment than Marubeni. However, Knightscope is 3.2 times more volatile than Marubeni. It trades about 0.11 of its potential returns per unit of risk. Marubeni is currently generating about 0.01 per unit of risk. If you would invest 1,586 in Knightscope on August 29, 2024 and sell it today you would earn a total of 228.00 from holding Knightscope or generate 14.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Knightscope vs. Marubeni
Performance |
| Timeline |
| Knightscope |
| Marubeni |
Knightscope and Marubeni Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Knightscope and Marubeni
The main advantage of trading using opposite Knightscope and Marubeni positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knightscope position performs unexpectedly, Marubeni 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 Marubeni will offset losses from the drop in Marubeni's long position.The idea behind Knightscope and Marubeni 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.| Marubeni vs. Marubeni Corp ADR | Marubeni vs. Mitsubishi Corp | Marubeni vs. Sumitomo Corp ADR | Marubeni vs. Itochu Corp ADR |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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