Correlation Between Lantronix and Knowles Cor

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

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

Diversification Opportunities for Lantronix and Knowles Cor

-0.65

Correlation Coefficient

Lantronix  Knowles Cor

Excellent diversification

The 3 months correlation between Lantronix and Knowles is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Lantronix and Knowles Cor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knowles Cor and Lantronix 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 Lantronix are associated (or correlated) with Knowles Cor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knowles Cor has no effect on the direction of Lantronix i.e., Lantronix and Knowles Cor go up and down completely randomly.

Pair Corralation between Lantronix and Knowles Cor

Given the investment horizon of 90 days Lantronix is expected to under-perform the Knowles Cor. In addition to that, Lantronix is 2.68 times more volatile than Knowles Cor. It trades about -0.02 of its total potential returns per unit of risk. Knowles Cor is currently generating about 0.1 per unit of volatility. If you would invest  1,739  in Knowles Cor on September 1, 2024 and sell it today you would earn a total of  207.00  from holding Knowles Cor or generate 11.9% return on investment over 90 days.

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

Lantronix  vs.  Knowles Cor

Lantronix

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lantronix has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Lantronix is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Knowles Cor

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Knowles Cor are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Knowles Cor may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Lantronix and Knowles Cor

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

The idea behind Lantronix and Knowles Cor 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.

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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.