Correlation Between ATWEC Technologies and Knightscope

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

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

Diversification Opportunities for ATWEC Technologies and Knightscope

0.31

Correlation Coefficient

ATWEC Technologies  Knightscope

Weak diversification

The 3 months correlation between ATWEC and Knightscope is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding ATWEC Technologies and Knightscope in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knightscope and ATWEC Technologies 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 ATWEC Technologies are associated (or correlated) with Knightscope. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knightscope has no effect on the direction of ATWEC Technologies i.e., ATWEC Technologies and Knightscope go up and down completely randomly.

Pair Corralation between ATWEC Technologies and Knightscope

Given the investment horizon of 90 days ATWEC Technologies is expected to generate 2.72 times more return on investment than Knightscope. However, ATWEC Technologies is 2.72 times more volatile than Knightscope. It trades about 0.08 of its potential returns per unit of risk. Knightscope is currently generating about 0.0 per unit of risk. If you would invest  0.31  in ATWEC Technologies on October 12, 2024 and sell it today you would lose (0.21) from holding ATWEC Technologies or give up 67.74% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

ATWEC Technologies  vs.  Knightscope

ATWEC Technologies

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ATWEC Technologies are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, ATWEC Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Knightscope

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Knightscope are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting fundamental indicators, Knightscope reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ATWEC Technologies and Knightscope

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

The idea behind ATWEC Technologies and Knightscope 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.