Correlation Between Knowles Cor and Cytta Corp

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

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

Diversification Opportunities for Knowles Cor and Cytta Corp

0.04

Correlation Coefficient

Knowles Cor  Cytta Corp

Significant diversification

The 3 months correlation between Knowles and Cytta is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Knowles Cor and Cytta Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cytta Corp and Knowles Cor 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 Knowles Cor are associated (or correlated) with Cytta Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cytta Corp has no effect on the direction of Knowles Cor i.e., Knowles Cor and Cytta Corp go up and down completely randomly.

Pair Corralation between Knowles Cor and Cytta Corp

Allowing for the 90-day total investment horizon Knowles Cor is expected to generate 2.94 times less return on investment than Cytta Corp. But when comparing it to its historical volatility, Knowles Cor is 6.11 times less risky than Cytta Corp. It trades about 0.18 of its potential returns per unit of risk. Cytta Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2.10  in Cytta Corp on September 13, 2024 and sell it today you would earn a total of  0.17  from holding Cytta Corp or generate 8.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Knowles Cor  vs.  Cytta Corp

Knowles Cor

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Knowles Cor are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Knowles Cor displayed solid returns over the last few months and may actually be approaching a breakup point.

Cytta Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cytta Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Knowles Cor and Cytta Corp

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

The idea behind Knowles Cor and Cytta Corp 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.