Correlation Between Knife River and Aquagold International

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

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

Diversification Opportunities for Knife River and Aquagold International

0.0

Correlation Coefficient

Knife River  Aquagold International

Pay attention - limited upside

The 3 months correlation between Knife and Aquagold is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Knife River and Aquagold International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aquagold International and Knife River 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 Knife River are associated (or correlated) with Aquagold International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aquagold International has no effect on the direction of Knife River i.e., Knife River and Aquagold International go up and down completely randomly.

Pair Corralation between Knife River and Aquagold International

Considering the 90-day investment horizon Knife River is expected to generate 0.46 times more return on investment than Aquagold International. However, Knife River is 2.19 times less risky than Aquagold International. It trades about 0.12 of its potential returns per unit of risk. Aquagold International is currently generating about 0.0 per unit of risk. If you would invest  4,098  in Knife River on August 31, 2024 and sell it today you would earn a total of  6,252  from holding Knife River or generate 152.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.73%
Values	Daily Returns

Knife River  vs.  Aquagold International

Knife River

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Knife River are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Knife River reported solid returns over the last few months and may actually be approaching a breakup point.

Aquagold International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aquagold International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Aquagold International is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Knife River and Aquagold International

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

The idea behind Knife River and Aquagold International 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.