Correlation Between Lantronix and Knightscope

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

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

Diversification Opportunities for Lantronix and Knightscope

-0.55

Correlation Coefficient

Lantronix  Knightscope

Excellent diversification

The 3 months correlation between Lantronix and Knightscope is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Lantronix and Knightscope in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knightscope 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 Knightscope. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knightscope has no effect on the direction of Lantronix i.e., Lantronix and Knightscope go up and down completely randomly.

Pair Corralation between Lantronix and Knightscope

Given the investment horizon of 90 days Lantronix is expected to generate 4.1 times less return on investment than Knightscope. But when comparing it to its historical volatility, Lantronix is 2.28 times less risky than Knightscope. It trades about 0.0 of its potential returns per unit of risk. Knightscope is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  2,635  in Knightscope on October 22, 2024 and sell it today you would lose (1,435) from holding Knightscope or give up 54.46% of portfolio value over 90 days.

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

Lantronix  vs.  Knightscope

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 latest inconsistent performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Knightscope

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Knightscope has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, Knightscope is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Lantronix and Knightscope

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

The idea behind Lantronix and Knightscope 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.