Correlation Between Knightscope and Teradyne

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

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

Diversification Opportunities for Knightscope and Teradyne

-0.42

Correlation Coefficient

Knightscope  Teradyne

Very good diversification

The 3 months correlation between Knightscope and Teradyne is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Knightscope and Teradyne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teradyne and Knightscope 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 Knightscope are associated (or correlated) with Teradyne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teradyne has no effect on the direction of Knightscope i.e., Knightscope and Teradyne go up and down completely randomly.

Pair Corralation between Knightscope and Teradyne

Given the investment horizon of 90 days Knightscope is expected to under-perform the Teradyne. In addition to that, Knightscope is 2.57 times more volatile than Teradyne. It trades about -0.14 of its total potential returns per unit of risk. Teradyne is currently generating about 0.08 per unit of volatility. If you would invest  10,258  in Teradyne on November 19, 2024 and sell it today you would earn a total of  1,067  from holding Teradyne or generate 10.4% return on investment over 90 days.

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

Knightscope  vs.  Teradyne

Knightscope

Risk-Adjusted Performance

Very Weak

Over the last 90 days Knightscope has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in March 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Teradyne

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Teradyne are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, Teradyne may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Knightscope and Teradyne

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

The idea behind Knightscope and Teradyne 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 Transaction History module to view history of all your transactions and understand their impact on performance.