Correlation Between Knightscope and Nano Dimension

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

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

Diversification Opportunities for Knightscope and Nano Dimension

-0.44

Correlation Coefficient

Knightscope  Nano Dimension

Very good diversification

The 3 months correlation between Knightscope and Nano is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Knightscope and Nano Dimension in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nano Dimension and Knightscope 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 Knightscope are associated (or correlated) with Nano Dimension. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nano Dimension has no effect on the direction of Knightscope i.e., Knightscope and Nano Dimension go up and down completely randomly.

Pair Corralation between Knightscope and Nano Dimension

Given the investment horizon of 90 days Knightscope is expected to generate 4.28 times more return on investment than Nano Dimension. However, Knightscope is 4.28 times more volatile than Nano Dimension. It trades about 0.12 of its potential returns per unit of risk. Nano Dimension is currently generating about 0.02 per unit of risk. If you would invest  1,200  in Knightscope on September 2, 2024 and sell it today you would earn a total of  599.00  from holding Knightscope or generate 49.92% return on investment over 90 days.

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

Knightscope  vs.  Nano Dimension

Knightscope

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Knightscope are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting fundamental indicators, Knightscope reported solid returns over the last few months and may actually be approaching a breakup point.

Nano Dimension

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nano Dimension are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Nano Dimension is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Knightscope and Nano Dimension

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

The idea behind Knightscope and Nano Dimension 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.

Check out your portfolio center.

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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..