Correlation Between Knorr-Bremse Aktiengesellscha and Foresight Autonomous

Can any of the company-specific risk be diversified away by investing in both Knorr-Bremse Aktiengesellscha and Foresight Autonomous 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 Knorr-Bremse Aktiengesellscha and Foresight Autonomous into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Knorr Bremse Aktiengesellschaft and Foresight Autonomous Holdings, you can compare the effects of market volatilities on Knorr-Bremse Aktiengesellscha and Foresight Autonomous 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 Knorr-Bremse Aktiengesellscha with a short position of Foresight Autonomous. Check out your portfolio center. Please also check ongoing floating volatility patterns of Knorr-Bremse Aktiengesellscha and Foresight Autonomous.

Diversification Opportunities for Knorr-Bremse Aktiengesellscha and Foresight Autonomous

-0.58

Correlation Coefficient

Knorr-Bremse Aktiengesellscha  Foresight Autonomous

Excellent diversification

The 3 months correlation between Knorr-Bremse and Foresight is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Knorr Bremse Aktiengesellschaf and Foresight Autonomous Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foresight Autonomous and Knorr-Bremse Aktiengesellscha 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 Knorr Bremse Aktiengesellschaft are associated (or correlated) with Foresight Autonomous. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foresight Autonomous has no effect on the direction of Knorr-Bremse Aktiengesellscha i.e., Knorr-Bremse Aktiengesellscha and Foresight Autonomous go up and down completely randomly.

Pair Corralation between Knorr-Bremse Aktiengesellscha and Foresight Autonomous

Assuming the 90 days horizon Knorr Bremse Aktiengesellschaft is expected to under-perform the Foresight Autonomous. But the pink sheet apears to be less risky and, when comparing its historical volatility, Knorr Bremse Aktiengesellschaft is 7.17 times less risky than Foresight Autonomous. The pink sheet trades about -0.14 of its potential returns per unit of risk. The Foresight Autonomous Holdings is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  66.00  in Foresight Autonomous Holdings on October 24, 2024 and sell it today you would earn a total of  60.00  from holding Foresight Autonomous Holdings or generate 90.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Knorr Bremse Aktiengesellschaf  vs.  Foresight Autonomous Holdings

Knorr-Bremse Aktiengesellscha

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Knorr Bremse Aktiengesellschaft has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Foresight Autonomous

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Foresight Autonomous Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Foresight Autonomous showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Knorr-Bremse Aktiengesellscha and Foresight Autonomous

The main advantage of trading using opposite Knorr-Bremse Aktiengesellscha and Foresight Autonomous positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knorr-Bremse Aktiengesellscha position performs unexpectedly, Foresight Autonomous 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 Foresight Autonomous will offset losses from the drop in Foresight Autonomous' long position.

The idea behind Knorr Bremse Aktiengesellschaft and Foresight Autonomous Holdings 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.