Correlation Between ClearOne and Knowles Cor

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

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

Diversification Opportunities for ClearOne and Knowles Cor

-0.49

Correlation Coefficient

ClearOne  Knowles Cor

Very good diversification

The 3 months correlation between ClearOne and Knowles is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding ClearOne and Knowles Cor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knowles Cor and ClearOne 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 ClearOne 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 ClearOne i.e., ClearOne and Knowles Cor go up and down completely randomly.

Pair Corralation between ClearOne and Knowles Cor

Given the investment horizon of 90 days ClearOne is expected to under-perform the Knowles Cor. In addition to that, ClearOne is 1.64 times more volatile than Knowles Cor. It trades about 0.0 of its total potential returns per unit of risk. Knowles Cor is currently generating about 0.12 per unit of volatility. If you would invest  1,728  in Knowles Cor on September 17, 2024 and sell it today you would earn a total of  254.00  from holding Knowles Cor or generate 14.7% return on investment over 90 days.

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

ClearOne  vs.  Knowles Cor

ClearOne

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ClearOne has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, ClearOne is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Knowles Cor

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Knowles Cor are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Knowles Cor displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ClearOne and Knowles Cor

The main advantage of trading using opposite ClearOne and Knowles Cor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ClearOne 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 ClearOne 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.