Correlation Between EcoSynthetix and Knight Therapeutics

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

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

Diversification Opportunities for EcoSynthetix and Knight Therapeutics

0.71

Correlation Coefficient

EcoSynthetix  Knight Therapeutics

Poor diversification

The 3 months correlation between EcoSynthetix and Knight is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding EcoSynthetix and Knight Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knight Therapeutics and EcoSynthetix 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 EcoSynthetix are associated (or correlated) with Knight Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knight Therapeutics has no effect on the direction of EcoSynthetix i.e., EcoSynthetix and Knight Therapeutics go up and down completely randomly.

Pair Corralation between EcoSynthetix and Knight Therapeutics

Assuming the 90 days trading horizon EcoSynthetix is expected to generate 1.02 times more return on investment than Knight Therapeutics. However, EcoSynthetix is 1.02 times more volatile than Knight Therapeutics. It trades about -0.01 of its potential returns per unit of risk. Knight Therapeutics is currently generating about -0.01 per unit of risk. If you would invest  437.00  in EcoSynthetix on October 7, 2024 and sell it today you would lose (14.00) from holding EcoSynthetix or give up 3.2% of portfolio value over 90 days.

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

EcoSynthetix  vs.  Knight Therapeutics

EcoSynthetix

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EcoSynthetix has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Knight Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Knight Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with EcoSynthetix and Knight Therapeutics

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

The idea behind EcoSynthetix and Knight Therapeutics 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.