Correlation Between Knight Club and Jay Mart

Can any of the company-specific risk be diversified away by investing in both Knight Club and Jay Mart 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 Jay Mart 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 Jay Mart Public, you can compare the effects of market volatilities on Knight Club and Jay Mart 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 Jay Mart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Knight Club and Jay Mart.

Diversification Opportunities for Knight Club and Jay Mart

0.7

Correlation Coefficient

Knight Club  Jay Mart

Poor diversification

The 3 months correlation between Knight and Jay is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Knight Club Capital and Jay Mart Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jay Mart Public 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 Jay Mart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jay Mart Public has no effect on the direction of Knight Club i.e., Knight Club and Jay Mart go up and down completely randomly.

Pair Corralation between Knight Club and Jay Mart

Assuming the 90 days trading horizon Knight Club Capital is expected to generate 0.83 times more return on investment than Jay Mart. However, Knight Club Capital is 1.2 times less risky than Jay Mart. It trades about -0.17 of its potential returns per unit of risk. Jay Mart Public is currently generating about -0.22 per unit of risk. If you would invest  234.00  in Knight Club Capital on December 2, 2024 and sell it today you would lose (52.00) from holding Knight Club Capital or give up 22.22% 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.  Jay Mart Public

Knight Club Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Knight Club Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Jay Mart Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jay Mart Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Knight Club and Jay Mart

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

The idea behind Knight Club Capital and Jay Mart Public 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.