Correlation Between InfuSystems Holdings and Knife River

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

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

Diversification Opportunities for InfuSystems Holdings and Knife River

0.71

Correlation Coefficient

InfuSystems Holdings  Knife River

Poor diversification

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

Pair Corralation between InfuSystems Holdings and Knife River

Given the investment horizon of 90 days InfuSystems Holdings is expected to under-perform the Knife River. In addition to that, InfuSystems Holdings is 1.38 times more volatile than Knife River. It trades about -0.16 of its total potential returns per unit of risk. Knife River is currently generating about 0.01 per unit of volatility. If you would invest  10,234  in Knife River on October 9, 2024 and sell it today you would lose (2.00) from holding Knife River or give up 0.02% of portfolio value over 90 days.

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

InfuSystems Holdings  vs.  Knife River

InfuSystems Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in InfuSystems Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, InfuSystems Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Knife River

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Knife River are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Knife River reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with InfuSystems Holdings and Knife River

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

The idea behind InfuSystems Holdings and Knife River 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.