Correlation Between Royal Plus and Knight Club
Can any of the company-specific risk be diversified away by investing in both Royal Plus 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 Royal Plus and Knight Club into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Royal Plus PCL and Knight Club Capital, you can compare the effects of market volatilities on Royal Plus 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 Royal Plus with a short position of Knight Club. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royal Plus and Knight Club.
Diversification Opportunities for Royal Plus and Knight Club
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Royal and Knight is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Royal Plus PCL 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 Royal Plus 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 Royal Plus PCL 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 Royal Plus i.e., Royal Plus and Knight Club go up and down completely randomly.
Pair Corralation between Royal Plus and Knight Club
Assuming the 90 days trading horizon Royal Plus PCL is expected to generate 0.62 times more return on investment than Knight Club. However, Royal Plus PCL is 1.61 times less risky than Knight Club. It trades about -0.03 of its potential returns per unit of risk. Knight Club Capital is currently generating about -0.04 per unit of risk. If you would invest 791.00 in Royal Plus PCL on September 12, 2024 and sell it today you would lose (286.00) from holding Royal Plus PCL or give up 36.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Royal Plus PCL vs. Knight Club Capital
Performance |
| Timeline |
| Royal Plus PCL |
| Knight Club Capital |
Royal Plus and Knight Club Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royal Plus and Knight Club
The main advantage of trading using opposite Royal Plus and Knight Club positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royal Plus 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.| Royal Plus vs. Delta Electronics Public | Royal Plus vs. Delta Electronics Public | Royal Plus vs. Airports of Thailand | Royal Plus vs. Airports of Thailand |
| 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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