Correlation Between North East and Knight Club
Can any of the company-specific risk be diversified away by investing in both North East and Knight Club 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 North East and Knight Club into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between North East Rubbers and Knight Club Capital, you can compare the effects of market volatilities on North East and Knight Club 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 North East with a short position of Knight Club. Check out your portfolio center. Please also check ongoing floating volatility patterns of North East and Knight Club.
Diversification Opportunities for North East and Knight Club
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between North and Knight is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding North East Rubbers and Knight Club Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knight Club Capital and North East 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 North East Rubbers are associated (or correlated) with Knight Club. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knight Club Capital has no effect on the direction of North East i.e., North East and Knight Club go up and down completely randomly.
Pair Corralation between North East and Knight Club
Assuming the 90 days trading horizon North East Rubbers is expected to under-perform the Knight Club. But the stock apears to be less risky and, when comparing its historical volatility, North East Rubbers is 3.67 times less risky than Knight Club. The stock trades about -0.03 of its potential returns per unit of risk. The Knight Club Capital is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 192.00 in Knight Club Capital on September 3, 2024 and sell it today you would earn a total of 44.00 from holding Knight Club Capital or generate 22.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
North East Rubbers vs. Knight Club Capital
Performance |
| Timeline |
| North East Rubbers |
| Knight Club Capital |
North East and Knight Club Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with North East and Knight Club
The main advantage of trading using opposite North East and Knight Club positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North East position performs unexpectedly, Knight Club 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 Knight Club will offset losses from the drop in Knight Club's long position.| North East vs. Sri Trang Agro Industry | North East vs. Jay Mart Public | North East vs. Com7 PCL | North East vs. Energy Absolute Public |
| Knight Club vs. Jay Mart Public | Knight Club vs. Bioscience Animal Health | Knight Club vs. KCE Electronics Public | Knight Club vs. Sabuy Technology Public |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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