Correlation Between Know Labs and Electro Sensors

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

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

Diversification Opportunities for Know Labs and Electro Sensors

-0.71

Correlation Coefficient

Know Labs  Electro Sensors

Pay attention - limited upside

The 3 months correlation between Know and Electro is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Know Labs and Electro Sensors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electro Sensors and Know Labs 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 Labs are associated (or correlated) with Electro Sensors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electro Sensors has no effect on the direction of Know Labs i.e., Know Labs and Electro Sensors go up and down completely randomly.

Pair Corralation between Know Labs and Electro Sensors

Considering the 90-day investment horizon Know Labs is expected to under-perform the Electro Sensors. In addition to that, Know Labs is 4.23 times more volatile than Electro Sensors. It trades about -0.07 of its total potential returns per unit of risk. Electro Sensors is currently generating about 0.45 per unit of volatility. If you would invest  436.00  in Electro Sensors on October 9, 2024 and sell it today you would earn a total of  101.00  from holding Electro Sensors or generate 23.17% return on investment over 90 days.

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

Know Labs  vs.  Electro Sensors

Know Labs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Know Labs has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Electro Sensors

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Electro Sensors are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Electro Sensors exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Know Labs and Electro Sensors

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

The idea behind Know Labs and Electro Sensors 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.