Correlation Between Wearable Devices and Know Labs

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

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

Diversification Opportunities for Wearable Devices and Know Labs

0.74

Correlation Coefficient

Wearable Devices  Know Labs

Poor diversification

The 3 months correlation between Wearable and Know is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Wearable Devices and Know Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Know Labs and Wearable Devices 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 Wearable Devices are associated (or correlated) with Know Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Know Labs has no effect on the direction of Wearable Devices i.e., Wearable Devices and Know Labs go up and down completely randomly.

Pair Corralation between Wearable Devices and Know Labs

Given the investment horizon of 90 days Wearable Devices is expected to under-perform the Know Labs. In addition to that, Wearable Devices is 1.87 times more volatile than Know Labs. It trades about -0.15 of its total potential returns per unit of risk. Know Labs is currently generating about -0.04 per unit of volatility. If you would invest  29.00  in Know Labs on August 30, 2024 and sell it today you would lose (5.00) from holding Know Labs or give up 17.24% of portfolio value over 90 days.

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

Wearable Devices  vs.  Know Labs

Wearable Devices

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wearable Devices has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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.

Pair Trading with Wearable Devices and Know Labs

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

The idea behind Wearable Devices and Know Labs 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.