Correlation Between Knight Club and Chamni Eye

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

By analyzing existing cross correlation between Knight Club Capital and Chamni Eye PCL, you can compare the effects of market volatilities on Knight Club and Chamni Eye 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 Knight Club with a short position of Chamni Eye. Check out your portfolio center. Please also check ongoing floating volatility patterns of Knight Club and Chamni Eye.

Diversification Opportunities for Knight Club and Chamni Eye

0.96

Correlation Coefficient

Knight Club  Chamni Eye

Almost no diversification

The 3 months correlation between Knight and Chamni is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Knight Club Capital and Chamni Eye PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chamni Eye PCL and Knight Club 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 Knight Club Capital are associated (or correlated) with Chamni Eye. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chamni Eye PCL has no effect on the direction of Knight Club i.e., Knight Club and Chamni Eye go up and down completely randomly.

Pair Corralation between Knight Club and Chamni Eye

Assuming the 90 days trading horizon Knight Club Capital is expected to under-perform the Chamni Eye. In addition to that, Knight Club is 2.1 times more volatile than Chamni Eye PCL. It trades about -0.21 of its total potential returns per unit of risk. Chamni Eye PCL is currently generating about -0.33 per unit of volatility. If you would invest  354.00  in Chamni Eye PCL on September 30, 2024 and sell it today you would lose (90.00) from holding Chamni Eye PCL or give up 25.42% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.39%
Values	Daily Returns

Knight Club Capital  vs.  Chamni Eye PCL

Knight Club Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Knight Club Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Chamni Eye PCL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chamni Eye PCL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Knight Club and Chamni Eye

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

The idea behind Knight Club Capital and Chamni Eye PCL 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.