Correlation Between ALTEOGEN and KNOTUS CoLtd

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

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

Diversification Opportunities for ALTEOGEN and KNOTUS CoLtd

0.19

Correlation Coefficient

ALTEOGEN  KNOTUS CoLtd

Average diversification

The 3 months correlation between ALTEOGEN and KNOTUS is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding ALTEOGEN and KNOTUS CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KNOTUS CoLtd and ALTEOGEN 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 ALTEOGEN 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 ALTEOGEN i.e., ALTEOGEN and KNOTUS CoLtd go up and down completely randomly.

Pair Corralation between ALTEOGEN and KNOTUS CoLtd

Assuming the 90 days trading horizon ALTEOGEN is expected to under-perform the KNOTUS CoLtd. In addition to that, ALTEOGEN is 1.88 times more volatile than KNOTUS CoLtd. It trades about -0.04 of its total potential returns per unit of risk. KNOTUS CoLtd is currently generating about 0.08 per unit of volatility. 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	Insignificant
Accuracy	97.62%
Values	Daily Returns

ALTEOGEN  vs.  KNOTUS CoLtd

ALTEOGEN

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ALTEOGEN has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, ALTEOGEN is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the 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 ALTEOGEN and KNOTUS CoLtd

The main advantage of trading using opposite ALTEOGEN and KNOTUS CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALTEOGEN 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 ALTEOGEN 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.