Correlation Between Know Labs and FARO Technologies
Can any of the company-specific risk be diversified away by investing in both Know Labs and FARO Technologies 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 FARO Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Know Labs and FARO Technologies, you can compare the effects of market volatilities on Know Labs and FARO Technologies 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 FARO Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Know Labs and FARO Technologies.
Diversification Opportunities for Know Labs and FARO Technologies
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Know and FARO is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Know Labs and FARO Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FARO Technologies 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 FARO Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FARO Technologies has no effect on the direction of Know Labs i.e., Know Labs and FARO Technologies go up and down completely randomly.
Pair Corralation between Know Labs and FARO Technologies
Considering the 90-day investment horizon Know Labs is expected to under-perform the FARO Technologies. In addition to that, Know Labs is 4.49 times more volatile than FARO Technologies. It trades about -0.05 of its total potential returns per unit of risk. FARO Technologies is currently generating about 0.05 per unit of volatility. If you would invest 2,662 in FARO Technologies on December 18, 2024 and sell it today you would earn a total of 237.00 from holding FARO Technologies or generate 8.9% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Know Labs vs. FARO Technologies
Performance |
Timeline |
Know Labs |
FARO Technologies |
Know Labs and FARO Technologies Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Know Labs and FARO Technologies
The main advantage of trading using opposite Know Labs and FARO Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Know Labs position performs unexpectedly, FARO Technologies 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 FARO Technologies will offset losses from the drop in FARO Technologies' long position.Know Labs vs. Wearable Devices | Know Labs vs. Yoshiharu Global Co | Know Labs vs. bioAffinity Technologies, | Know Labs vs. Jianzhi Education Technology |
FARO Technologies vs. Coherent | FARO Technologies vs. ESCO Technologies | FARO Technologies vs. Mesa Laboratories | FARO Technologies vs. Vishay Precision Group |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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