Correlation Between KNOT Offshore and Jutal Offshore

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

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

Diversification Opportunities for KNOT Offshore and Jutal Offshore

-0.73

Correlation Coefficient

KNOT Offshore  Jutal Offshore

Pay attention - limited upside

The 3 months correlation between KNOT and Jutal is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding KNOT Offshore Partners and Jutal Offshore Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jutal Offshore Oil and KNOT Offshore 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 KNOT Offshore Partners are associated (or correlated) with Jutal Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jutal Offshore Oil has no effect on the direction of KNOT Offshore i.e., KNOT Offshore and Jutal Offshore go up and down completely randomly.

Pair Corralation between KNOT Offshore and Jutal Offshore

Given the investment horizon of 90 days KNOT Offshore Partners is expected to under-perform the Jutal Offshore. But the stock apears to be less risky and, when comparing its historical volatility, KNOT Offshore Partners is 1.32 times less risky than Jutal Offshore. The stock trades about -0.2 of its potential returns per unit of risk. The Jutal Offshore Oil is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,560  in Jutal Offshore Oil on August 31, 2024 and sell it today you would earn a total of  350.00  from holding Jutal Offshore Oil or generate 22.44% return on investment over 90 days.

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

KNOT Offshore Partners  vs.  Jutal Offshore Oil

KNOT Offshore Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KNOT Offshore Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Jutal Offshore Oil

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jutal Offshore Oil are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Jutal Offshore showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KNOT Offshore and Jutal Offshore

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

The idea behind KNOT Offshore Partners and Jutal Offshore Oil 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.