Correlation Between Chamni Eye and Knight Club

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

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

Diversification Opportunities for Chamni Eye and Knight Club

0.73

Correlation Coefficient

Chamni Eye  Knight Club

Poor diversification

The 3 months correlation between Chamni and Knight is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Chamni Eye PCL 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 Chamni Eye 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 Chamni Eye PCL 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 Chamni Eye i.e., Chamni Eye and Knight Club go up and down completely randomly.

Pair Corralation between Chamni Eye and Knight Club

Assuming the 90 days trading horizon Chamni Eye PCL is expected to generate 1.7 times more return on investment than Knight Club. However, Chamni Eye is 1.7 times more volatile than Knight Club Capital. It trades about -0.06 of its potential returns per unit of risk. Knight Club Capital is currently generating about -0.12 per unit of risk. If you would invest  255.00  in Chamni Eye PCL on December 27, 2024 and sell it today you would lose (31.00) from holding Chamni Eye PCL or give up 12.16% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.77%
Values	Daily Returns

Chamni Eye PCL  vs.  Knight Club Capital

Chamni Eye PCL

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chamni Eye PCL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Knight Club Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Knight Club Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Chamni Eye and Knight Club

The main advantage of trading using opposite Chamni Eye and Knight Club positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chamni Eye 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 Chamni Eye PCL 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.