Correlation Between KNOT Offshore and Neo Concept

Can any of the company-specific risk be diversified away by investing in both KNOT Offshore and Neo Concept 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 Neo Concept 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 Neo Concept International Group, you can compare the effects of market volatilities on KNOT Offshore and Neo Concept 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 Neo Concept. Check out your portfolio center. Please also check ongoing floating volatility patterns of KNOT Offshore and Neo Concept.

Diversification Opportunities for KNOT Offshore and Neo Concept

-0.08

Correlation Coefficient

KNOT Offshore  Neo Concept

Good diversification

The 3 months correlation between KNOT and Neo is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding KNOT Offshore Partners and Neo Concept International Grou in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neo Concept Internat 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 Neo Concept. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neo Concept Internat has no effect on the direction of KNOT Offshore i.e., KNOT Offshore and Neo Concept go up and down completely randomly.

Pair Corralation between KNOT Offshore and Neo Concept

Given the investment horizon of 90 days KNOT Offshore Partners is expected to under-perform the Neo Concept. But the stock apears to be less risky and, when comparing its historical volatility, KNOT Offshore Partners is 10.84 times less risky than Neo Concept. The stock trades about -0.19 of its potential returns per unit of risk. The Neo Concept International Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  51.00  in Neo Concept International Group on September 12, 2024 and sell it today you would earn a total of  5.00  from holding Neo Concept International Group or generate 9.8% return on investment over 90 days.

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

KNOT Offshore Partners  vs.  Neo Concept International Grou

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 January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Neo Concept Internat

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Neo Concept International Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak fundamental indicators, Neo Concept demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KNOT Offshore and Neo Concept

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

The idea behind KNOT Offshore Partners and Neo Concept International Group 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.