Correlation Between KNOTUS CoLtd and Genolution

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

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

Diversification Opportunities for KNOTUS CoLtd and Genolution

0.38

Correlation Coefficient

KNOTUS CoLtd  Genolution

Weak diversification

The 3 months correlation between KNOTUS and Genolution is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding KNOTUS CoLtd and Genolution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genolution and KNOTUS CoLtd 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 KNOTUS CoLtd are associated (or correlated) with Genolution. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genolution has no effect on the direction of KNOTUS CoLtd i.e., KNOTUS CoLtd and Genolution go up and down completely randomly.

Pair Corralation between KNOTUS CoLtd and Genolution

Assuming the 90 days trading horizon KNOTUS CoLtd is expected to generate 1.3 times more return on investment than Genolution. However, KNOTUS CoLtd is 1.3 times more volatile than Genolution. It trades about -0.02 of its potential returns per unit of risk. Genolution is currently generating about -0.03 per unit of risk. If you would invest  477,000  in KNOTUS CoLtd on October 12, 2024 and sell it today you would lose (237,000) from holding KNOTUS CoLtd or give up 49.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

KNOTUS CoLtd  vs.  Genolution

KNOTUS CoLtd

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KNOTUS CoLtd are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, KNOTUS CoLtd sustained solid returns over the last few months and may actually be approaching a breakup point.

Genolution

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genolution 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.

Pair Trading with KNOTUS CoLtd and Genolution

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

The idea behind KNOTUS CoLtd and Genolution 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.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.