Correlation Between Knight Transportation and Kronos Advanced

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

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

Diversification Opportunities for Knight Transportation and Kronos Advanced

0.02

Correlation Coefficient

Knight Transportation  Kronos Advanced

Significant diversification

The 3 months correlation between Knight and Kronos is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Knight Transportation and Kronos Advanced Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kronos Advanced Tech and Knight Transportation 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 Transportation are associated (or correlated) with Kronos Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kronos Advanced Tech has no effect on the direction of Knight Transportation i.e., Knight Transportation and Kronos Advanced go up and down completely randomly.

Pair Corralation between Knight Transportation and Kronos Advanced

Considering the 90-day investment horizon Knight Transportation is expected to generate 8.6 times less return on investment than Kronos Advanced. But when comparing it to its historical volatility, Knight Transportation is 6.4 times less risky than Kronos Advanced. It trades about 0.1 of its potential returns per unit of risk. Kronos Advanced Technologies is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  0.50  in Kronos Advanced Technologies on September 4, 2024 and sell it today you would earn a total of  0.41  from holding Kronos Advanced Technologies or generate 82.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Knight Transportation  vs.  Kronos Advanced Technologies

Knight Transportation

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Knight Transportation are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Knight Transportation may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Kronos Advanced Tech

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kronos Advanced Technologies are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Kronos Advanced unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Knight Transportation and Kronos Advanced

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

The idea behind Knight Transportation and Kronos Advanced Technologies 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.