Correlation Between Bioscience Animal and Knight Club

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

By analyzing existing cross correlation between Bioscience Animal Health and Knight Club Capital, you can compare the effects of market volatilities on Bioscience Animal and Knight Club 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 Bioscience Animal with a short position of Knight Club. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bioscience Animal and Knight Club.

Diversification Opportunities for Bioscience Animal and Knight Club

0.62

Correlation Coefficient

Bioscience Animal  Knight Club

Poor diversification

The 3 months correlation between Bioscience and Knight is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Bioscience Animal Health and Knight Club Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knight Club Capital and Bioscience Animal 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 Bioscience Animal Health are associated (or correlated) with Knight Club. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knight Club Capital has no effect on the direction of Bioscience Animal i.e., Bioscience Animal and Knight Club go up and down completely randomly.

Pair Corralation between Bioscience Animal and Knight Club

Assuming the 90 days trading horizon Bioscience Animal is expected to generate 8.78 times less return on investment than Knight Club. But when comparing it to its historical volatility, Bioscience Animal Health is 2.49 times less risky than Knight Club. It trades about 0.01 of its potential returns per unit of risk. Knight Club Capital is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  238.00  in Knight Club Capital on September 3, 2024 and sell it today you would lose (2.00) from holding Knight Club Capital or give up 0.84% of portfolio value over 90 days.

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

Bioscience Animal Health  vs.  Knight Club Capital

Bioscience Animal Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bioscience Animal Health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Bioscience Animal is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Knight Club Capital

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Knight Club Capital are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental indicators, Knight Club may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Bioscience Animal and Knight Club

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

The idea behind Bioscience Animal Health and Knight Club Capital 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.