Correlation Between Know IT and Precise Biometrics

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

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

Diversification Opportunities for Know IT and Precise Biometrics

0.13

Correlation Coefficient

Know IT  Precise Biometrics

Average diversification

The 3 months correlation between Know and Precise is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Know IT AB and Precise Biometrics AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precise Biometrics and Know IT 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 Know IT AB are associated (or correlated) with Precise Biometrics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Precise Biometrics has no effect on the direction of Know IT i.e., Know IT and Precise Biometrics go up and down completely randomly.

Pair Corralation between Know IT and Precise Biometrics

Assuming the 90 days trading horizon Know IT AB is expected to under-perform the Precise Biometrics. But the stock apears to be less risky and, when comparing its historical volatility, Know IT AB is 3.37 times less risky than Precise Biometrics. The stock trades about -0.03 of its potential returns per unit of risk. The Precise Biometrics AB is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  403.00  in Precise Biometrics AB on October 10, 2024 and sell it today you would earn a total of  120.00  from holding Precise Biometrics AB or generate 29.78% return on investment over 90 days.

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

Know IT AB  vs.  Precise Biometrics AB

Know IT AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Know IT AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Know IT is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Precise Biometrics

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Precise Biometrics AB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Precise Biometrics unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Know IT and Precise Biometrics

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

The idea behind Know IT AB and Precise Biometrics AB 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..