Correlation Between Knight Club and Bioscience Animal

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

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

Diversification Opportunities for Knight Club and Bioscience Animal

0.62

Correlation Coefficient

Knight Club  Bioscience Animal

Poor diversification

The 3 months correlation between Knight and Bioscience is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Knight Club Capital and Bioscience Animal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bioscience Animal Health and Knight Club 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 Club Capital are associated (or correlated) with Bioscience Animal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bioscience Animal Health has no effect on the direction of Knight Club i.e., Knight Club and Bioscience Animal go up and down completely randomly.

Pair Corralation between Knight Club and Bioscience Animal

Assuming the 90 days trading horizon Knight Club Capital is expected to generate 2.49 times more return on investment than Bioscience Animal. However, Knight Club is 2.49 times more volatile than Bioscience Animal Health. It trades about 0.02 of its potential returns per unit of risk. Bioscience Animal Health is currently generating about 0.01 per unit of risk. If you would invest  238.00  in Knight Club Capital on September 3, 2024 and sell it today you would lose (2.00) from holding Knight Club Capital or give up 0.84% of portfolio value over 90 days.

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

Knight Club Capital  vs.  Bioscience Animal Health

Knight Club Capital

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Knight Club Capital are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental indicators, Knight Club may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Bioscience Animal Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bioscience Animal Health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Bioscience Animal is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Knight Club and Bioscience Animal

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

The idea behind Knight Club Capital and Bioscience Animal Health 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.

Check out your portfolio center.

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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.