Correlation Between Intel and Knight Therapeutics

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

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

Diversification Opportunities for Intel and Knight Therapeutics

0.23

Correlation Coefficient

Intel  Knight Therapeutics

Modest diversification

The 3 months correlation between Intel and Knight is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Intel and Knight Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knight Therapeutics and Intel 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 Intel 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 Intel i.e., Intel and Knight Therapeutics go up and down completely randomly.

Pair Corralation between Intel and Knight Therapeutics

Given the investment horizon of 90 days Intel is expected to under-perform the Knight Therapeutics. In addition to that, Intel is 1.93 times more volatile than Knight Therapeutics. It trades about -0.01 of its total potential returns per unit of risk. Knight Therapeutics is currently generating about -0.01 per unit of volatility. If you would invest  396.00  in Knight Therapeutics on October 7, 2024 and sell it today you would lose (35.00) from holding Knight Therapeutics or give up 8.84% of portfolio value over 90 days.

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

Intel  vs.  Knight Therapeutics

Intel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Intel is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

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. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Intel and Knight Therapeutics

The main advantage of trading using opposite Intel and Knight Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intel 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 Intel 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.