Correlation Between VerifyMe and Knightscope

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

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

Diversification Opportunities for VerifyMe and Knightscope

-0.52

Correlation Coefficient

VerifyMe  Knightscope

Excellent diversification

The 3 months correlation between VerifyMe and Knightscope is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding VerifyMe and Knightscope in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knightscope and VerifyMe 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 VerifyMe are associated (or correlated) with Knightscope. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knightscope has no effect on the direction of VerifyMe i.e., VerifyMe and Knightscope go up and down completely randomly.

Pair Corralation between VerifyMe and Knightscope

Given the investment horizon of 90 days VerifyMe is expected to under-perform the Knightscope. But the stock apears to be less risky and, when comparing its historical volatility, VerifyMe is 2.04 times less risky than Knightscope. The stock trades about -0.12 of its potential returns per unit of risk. The Knightscope is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,200  in Knightscope on August 31, 2024 and sell it today you would earn a total of  536.00  from holding Knightscope or generate 44.67% return on investment over 90 days.

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

VerifyMe  vs.  Knightscope

VerifyMe

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VerifyMe has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Knightscope

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Knightscope are ranked lower than 8 (%) 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.

Pair Trading with VerifyMe and Knightscope

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

The idea behind VerifyMe and Knightscope 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 Commodity Directory module to find actively traded commodities issued by global exchanges.