Correlation Between Surgical Science and Knights Group

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

By analyzing existing cross correlation between Surgical Science Sweden and Knights Group Holdings, you can compare the effects of market volatilities on Surgical Science and Knights Group 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 Surgical Science with a short position of Knights Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Surgical Science and Knights Group.

Diversification Opportunities for Surgical Science and Knights Group

-0.28

Correlation Coefficient

Surgical Science  Knights Group

Very good diversification

The 3 months correlation between Surgical and Knights is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Surgical Science Sweden and Knights Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knights Group Holdings and Surgical Science 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 Surgical Science Sweden are associated (or correlated) with Knights Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knights Group Holdings has no effect on the direction of Surgical Science i.e., Surgical Science and Knights Group go up and down completely randomly.

Pair Corralation between Surgical Science and Knights Group

Assuming the 90 days trading horizon Surgical Science Sweden is expected to under-perform the Knights Group. In addition to that, Surgical Science is 1.02 times more volatile than Knights Group Holdings. It trades about -0.01 of its total potential returns per unit of risk. Knights Group Holdings is currently generating about 0.04 per unit of volatility. If you would invest  8,501  in Knights Group Holdings on October 24, 2024 and sell it today you would earn a total of  3,699  from holding Knights Group Holdings or generate 43.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.05%
Values	Daily Returns

Surgical Science Sweden  vs.  Knights Group Holdings

Surgical Science Sweden

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Surgical Science Sweden are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Surgical Science unveiled solid returns over the last few months and may actually be approaching a breakup point.

Knights Group Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Knights Group Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Knights Group is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Surgical Science and Knights Group

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

The idea behind Surgical Science Sweden and Knights Group Holdings 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..