Correlation Between Knight Transportation and Mingzhu Logistics

Can any of the company-specific risk be diversified away by investing in both Knight Transportation and Mingzhu Logistics 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 Knight Transportation and Mingzhu Logistics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Knight Transportation and Mingzhu Logistics Holdings, you can compare the effects of market volatilities on Knight Transportation and Mingzhu Logistics 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 Knight Transportation with a short position of Mingzhu Logistics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Knight Transportation and Mingzhu Logistics.

Diversification Opportunities for Knight Transportation and Mingzhu Logistics

-0.39

Correlation Coefficient

Knight Transportation  Mingzhu Logistics

Very good diversification

The 3 months correlation between Knight and Mingzhu is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Knight Transportation and Mingzhu Logistics Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mingzhu Logistics and Knight Transportation 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 Knight Transportation are associated (or correlated) with Mingzhu Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mingzhu Logistics has no effect on the direction of Knight Transportation i.e., Knight Transportation and Mingzhu Logistics go up and down completely randomly.

Pair Corralation between Knight Transportation and Mingzhu Logistics

Considering the 90-day investment horizon Knight Transportation is expected to generate 1.76 times less return on investment than Mingzhu Logistics. But when comparing it to its historical volatility, Knight Transportation is 3.09 times less risky than Mingzhu Logistics. It trades about 0.08 of its potential returns per unit of risk. Mingzhu Logistics Holdings is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  113.00  in Mingzhu Logistics Holdings on September 13, 2024 and sell it today you would earn a total of  7.00  from holding Mingzhu Logistics Holdings or generate 6.19% return on investment over 90 days.

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

Knight Transportation  vs.  Mingzhu Logistics Holdings

Knight Transportation

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Knight Transportation are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Knight Transportation may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Mingzhu Logistics

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mingzhu Logistics Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent primary indicators, Mingzhu Logistics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Knight Transportation and Mingzhu Logistics

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

The idea behind Knight Transportation and Mingzhu Logistics 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..