Correlation Between Know Labs and Focus Universal

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

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

Diversification Opportunities for Know Labs and Focus Universal

0.48

Correlation Coefficient

Know Labs  Focus Universal

Very weak diversification

The 3 months correlation between Know and Focus is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Know Labs and Focus Universal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Focus Universal and Know Labs 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 Know Labs are associated (or correlated) with Focus Universal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Focus Universal has no effect on the direction of Know Labs i.e., Know Labs and Focus Universal go up and down completely randomly.

Pair Corralation between Know Labs and Focus Universal

Considering the 90-day investment horizon Know Labs is expected to under-perform the Focus Universal. But the stock apears to be less risky and, when comparing its historical volatility, Know Labs is 1.62 times less risky than Focus Universal. The stock trades about -0.03 of its potential returns per unit of risk. The Focus Universal is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  30.00  in Focus Universal on September 3, 2024 and sell it today you would lose (4.00) from holding Focus Universal or give up 13.33% of portfolio value over 90 days.

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

Know Labs  vs.  Focus Universal

Know Labs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Know Labs has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Focus Universal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Focus Universal has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Focus Universal is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Know Labs and Focus Universal

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

The idea behind Know Labs and Focus Universal 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.