Correlation Between Mobileye Global and Knorr-Bremse Aktiengesellscha

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

By analyzing existing cross correlation between Mobileye Global Class and Knorr Bremse Aktiengesellschaft, you can compare the effects of market volatilities on Mobileye Global and Knorr-Bremse Aktiengesellscha 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 Mobileye Global with a short position of Knorr-Bremse Aktiengesellscha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mobileye Global and Knorr-Bremse Aktiengesellscha.

Diversification Opportunities for Mobileye Global and Knorr-Bremse Aktiengesellscha

-0.83

Correlation Coefficient

Mobileye Global  Knorr-Bremse Aktiengesellscha

Pay attention - limited upside

The 3 months correlation between Mobileye and Knorr-Bremse is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Mobileye Global Class and Knorr Bremse Aktiengesellschaf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knorr-Bremse Aktiengesellscha and Mobileye Global 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 Mobileye Global Class are associated (or correlated) with Knorr-Bremse Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knorr-Bremse Aktiengesellscha has no effect on the direction of Mobileye Global i.e., Mobileye Global and Knorr-Bremse Aktiengesellscha go up and down completely randomly.

Pair Corralation between Mobileye Global and Knorr-Bremse Aktiengesellscha

Given the investment horizon of 90 days Mobileye Global Class is expected to generate 3.1 times more return on investment than Knorr-Bremse Aktiengesellscha. However, Mobileye Global is 3.1 times more volatile than Knorr Bremse Aktiengesellschaft. It trades about 0.09 of its potential returns per unit of risk. Knorr Bremse Aktiengesellschaft is currently generating about -0.17 per unit of risk. If you would invest  1,300  in Mobileye Global Class on October 22, 2024 and sell it today you would earn a total of  302.00  from holding Mobileye Global Class or generate 23.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Mobileye Global Class  vs.  Knorr Bremse Aktiengesellschaf

Mobileye Global Class

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mobileye Global Class are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain essential indicators, Mobileye Global showed solid returns over the last few months and may actually be approaching a breakup point.

Knorr-Bremse Aktiengesellscha

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Knorr Bremse Aktiengesellschaft has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Mobileye Global and Knorr-Bremse Aktiengesellscha

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

The idea behind Mobileye Global Class and Knorr Bremse Aktiengesellschaft 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.