Correlation Between Benchmark Electronics and Knightscope

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

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

Diversification Opportunities for Benchmark Electronics and Knightscope

0.59

Correlation Coefficient

Benchmark Electronics  Knightscope

Very weak diversification

The 3 months correlation between Benchmark and Knightscope is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Benchmark Electronics and Knightscope in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knightscope and Benchmark Electronics 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 Benchmark Electronics 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 Benchmark Electronics i.e., Benchmark Electronics and Knightscope go up and down completely randomly.

Pair Corralation between Benchmark Electronics and Knightscope

Considering the 90-day investment horizon Benchmark Electronics is expected to generate 0.3 times more return on investment than Knightscope. However, Benchmark Electronics is 3.31 times less risky than Knightscope. It trades about 0.09 of its potential returns per unit of risk. Knightscope is currently generating about 0.0 per unit of risk. If you would invest  2,945  in Benchmark Electronics on October 22, 2024 and sell it today you would earn a total of  1,863  from holding Benchmark Electronics or generate 63.26% return on investment over 90 days.

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

Benchmark Electronics  vs.  Knightscope

Benchmark Electronics

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Benchmark Electronics are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical indicators, Benchmark Electronics exhibited solid returns over the last few months and may actually be approaching a breakup point.

Knightscope

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Knightscope has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, Knightscope is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Benchmark Electronics and Knightscope

The main advantage of trading using opposite Benchmark Electronics and Knightscope positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Benchmark Electronics 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 Benchmark Electronics 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.