Correlation Between KIN and Knight Transportation

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

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

Diversification Opportunities for KIN and Knight Transportation

-0.46

Correlation Coefficient

KIN  Knight Transportation

Very good diversification

The 3 months correlation between KIN and Knight is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding KIN and Knight Transportation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knight Transportation and KIN 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 KIN are associated (or correlated) with Knight Transportation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knight Transportation has no effect on the direction of KIN i.e., KIN and Knight Transportation go up and down completely randomly.

Pair Corralation between KIN and Knight Transportation

Assuming the 90 days trading horizon KIN is expected to under-perform the Knight Transportation. In addition to that, KIN is 3.58 times more volatile than Knight Transportation. It trades about -0.04 of its total potential returns per unit of risk. Knight Transportation is currently generating about 0.11 per unit of volatility. If you would invest  5,228  in Knight Transportation on September 3, 2024 and sell it today you would earn a total of  708.00  from holding Knight Transportation or generate 13.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

KIN  vs.  Knight Transportation

KIN

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KIN has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for KIN shareholders.

Knight Transportation

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Knight Transportation are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Knight Transportation showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KIN and Knight Transportation

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

The idea behind KIN and Knight Transportation 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.