Correlation Between Lai Sun and Knife River

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

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

Diversification Opportunities for Lai Sun and Knife River

0.0

Correlation Coefficient

Lai Sun  Knife River

Pay attention - limited upside

The 3 months correlation between Lai and Knife is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Lai Sun Development and Knife River in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knife River and Lai Sun 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 Lai Sun Development are associated (or correlated) with Knife River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knife River has no effect on the direction of Lai Sun i.e., Lai Sun and Knife River go up and down completely randomly.

Pair Corralation between Lai Sun and Knife River

If you would invest  10,263  in Knife River on October 22, 2024 and sell it today you would earn a total of  225.00  from holding Knife River or generate 2.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Lai Sun Development  vs.  Knife River

Lai Sun Development

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lai Sun Development has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Lai Sun is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Knife River

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Knife River are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Knife River reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lai Sun and Knife River

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

The idea behind Lai Sun Development and Knife River 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.