Correlation Between Brinks and Knightscope

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

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

Diversification Opportunities for Brinks and Knightscope

-0.81

Correlation Coefficient

Brinks  Knightscope

Pay attention - limited upside

The 3 months correlation between Brinks and Knightscope is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Brinks Company and Knightscope in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knightscope and Brinks 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 Brinks Company 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 Brinks i.e., Brinks and Knightscope go up and down completely randomly.

Pair Corralation between Brinks and Knightscope

Considering the 90-day investment horizon Brinks Company is expected to under-perform the Knightscope. But the stock apears to be less risky and, when comparing its historical volatility, Brinks Company is 7.21 times less risky than Knightscope. The stock trades about -0.13 of its potential returns per unit of risk. The Knightscope is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,280  in Knightscope on August 30, 2024 and sell it today you would earn a total of  456.00  from holding Knightscope or generate 35.63% return on investment over 90 days.

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

Brinks Company  vs.  Knightscope

Brinks Company

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brinks Company 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 fundamental indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Knightscope

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Knightscope are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating fundamental indicators, Knightscope reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Brinks and Knightscope

The main advantage of trading using opposite Brinks and Knightscope positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brinks 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 Brinks Company 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.