Correlation Between Knight Therapeutics and Gamehost

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

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

Diversification Opportunities for Knight Therapeutics and Gamehost

-0.16

Correlation Coefficient

Knight Therapeutics  Gamehost

Good diversification

The 3 months correlation between Knight and Gamehost is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Knight Therapeutics and Gamehost in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gamehost and Knight Therapeutics 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 Knight Therapeutics are associated (or correlated) with Gamehost. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gamehost has no effect on the direction of Knight Therapeutics i.e., Knight Therapeutics and Gamehost go up and down completely randomly.

Pair Corralation between Knight Therapeutics and Gamehost

Assuming the 90 days trading horizon Knight Therapeutics is expected to under-perform the Gamehost. In addition to that, Knight Therapeutics is 1.84 times more volatile than Gamehost. It trades about -0.09 of its total potential returns per unit of risk. Gamehost is currently generating about -0.05 per unit of volatility. If you would invest  1,037  in Gamehost on October 7, 2024 and sell it today you would lose (32.00) from holding Gamehost or give up 3.09% of portfolio value over 90 days.

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

Knight Therapeutics  vs.  Gamehost

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.

Gamehost

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gamehost has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Gamehost is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Knight Therapeutics and Gamehost

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

The idea behind Knight Therapeutics and Gamehost 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.