Correlation Between Sonim Technologies and Knowles Cor

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

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

Diversification Opportunities for Sonim Technologies and Knowles Cor

0.17

Correlation Coefficient

Sonim Technologies  Knowles Cor

Average diversification

The 3 months correlation between Sonim and Knowles is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Sonim Technologies and Knowles Cor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knowles Cor and Sonim Technologies 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 Sonim Technologies 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 Sonim Technologies i.e., Sonim Technologies and Knowles Cor go up and down completely randomly.

Pair Corralation between Sonim Technologies and Knowles Cor

Given the investment horizon of 90 days Sonim Technologies is expected to generate 2.7 times more return on investment than Knowles Cor. However, Sonim Technologies is 2.7 times more volatile than Knowles Cor. It trades about 0.01 of its potential returns per unit of risk. Knowles Cor is currently generating about 0.01 per unit of risk. If you would invest  514.00  in Sonim Technologies on October 27, 2024 and sell it today you would lose (187.00) from holding Sonim Technologies or give up 36.38% of portfolio value over 90 days.

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

Sonim Technologies  vs.  Knowles Cor

Sonim Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sonim Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Sonim Technologies is not utilizing all of its potentials. The recent stock price disarray, 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 February 2025.

Pair Trading with Sonim Technologies and Knowles Cor

The main advantage of trading using opposite Sonim Technologies and Knowles Cor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonim Technologies 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 Sonim Technologies 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.

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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.