Correlation Between Helixmith and KNOTUS CoLtd

Can any of the company-specific risk be diversified away by investing in both Helixmith and KNOTUS CoLtd 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 Helixmith and KNOTUS CoLtd into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Helixmith Co and KNOTUS CoLtd, you can compare the effects of market volatilities on Helixmith and KNOTUS CoLtd 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 Helixmith with a short position of KNOTUS CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Helixmith and KNOTUS CoLtd.

Diversification Opportunities for Helixmith and KNOTUS CoLtd

0.51

Correlation Coefficient

Helixmith  KNOTUS CoLtd

Very weak diversification

The 3 months correlation between Helixmith and KNOTUS is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Helixmith Co and KNOTUS CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KNOTUS CoLtd and Helixmith 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 Helixmith Co are associated (or correlated) with KNOTUS CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KNOTUS CoLtd has no effect on the direction of Helixmith i.e., Helixmith and KNOTUS CoLtd go up and down completely randomly.

Pair Corralation between Helixmith and KNOTUS CoLtd

Assuming the 90 days trading horizon Helixmith Co is expected to under-perform the KNOTUS CoLtd. But the stock apears to be less risky and, when comparing its historical volatility, Helixmith Co is 1.13 times less risky than KNOTUS CoLtd. The stock trades about -0.24 of its potential returns per unit of risk. The KNOTUS CoLtd is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  208,000  in KNOTUS CoLtd on October 6, 2024 and sell it today you would earn a total of  18,500  from holding KNOTUS CoLtd or generate 8.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	97.62%
Values	Daily Returns

Helixmith Co  vs.  KNOTUS CoLtd

Helixmith

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Helixmith Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

KNOTUS CoLtd

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KNOTUS CoLtd are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, KNOTUS CoLtd is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Helixmith and KNOTUS CoLtd

The main advantage of trading using opposite Helixmith and KNOTUS CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Helixmith position performs unexpectedly, KNOTUS CoLtd 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 KNOTUS CoLtd will offset losses from the drop in KNOTUS CoLtd's long position.

The idea behind Helixmith Co and KNOTUS CoLtd 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.