Correlation Between Astar and Kngt Clb

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

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

Diversification Opportunities for Astar and Kngt Clb

0.39

Correlation Coefficient

Astar  Kngt Clb

Weak diversification

The 3 months correlation between Astar and Kngt is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Astar and Kngt Clb Larg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kngt Clb Larg and Astar 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 Astar are associated (or correlated) with Kngt Clb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kngt Clb Larg has no effect on the direction of Astar i.e., Astar and Kngt Clb go up and down completely randomly.

Pair Corralation between Astar and Kngt Clb

Assuming the 90 days trading horizon Astar is expected to generate 8.92 times more return on investment than Kngt Clb. However, Astar is 8.92 times more volatile than Kngt Clb Larg. It trades about 0.03 of its potential returns per unit of risk. Kngt Clb Larg is currently generating about 0.11 per unit of risk. If you would invest  5.95  in Astar on October 24, 2024 and sell it today you would lose (0.43) from holding Astar or give up 7.23% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	60.12%
Values	Daily Returns

Astar  vs.  Kngt Clb Larg

Astar

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Astar are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Astar may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Kngt Clb Larg

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kngt Clb Larg are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Kngt Clb is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Astar and Kngt Clb

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

The idea behind Astar and Kngt Clb Larg 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.