Correlation Between Medical Equipment and Knife River

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

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

Diversification Opportunities for Medical Equipment and Knife River

0.31

Correlation Coefficient

Medical Equipment  Knife River

Weak diversification

The 3 months correlation between Medical and Knife is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Medical Equipment And and Knife River in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knife River and Medical Equipment 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 Medical Equipment And are associated (or correlated) with Knife River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knife River has no effect on the direction of Medical Equipment i.e., Medical Equipment and Knife River go up and down completely randomly.

Pair Corralation between Medical Equipment and Knife River

Assuming the 90 days horizon Medical Equipment And is expected to generate 0.42 times more return on investment than Knife River. However, Medical Equipment And is 2.39 times less risky than Knife River. It trades about -0.17 of its potential returns per unit of risk. Knife River is currently generating about -0.18 per unit of risk. If you would invest  6,484  in Medical Equipment And on March 19, 2024 and sell it today you would lose (152.00) from holding Medical Equipment And or give up 2.34% of portfolio value over 90 days.

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

Medical Equipment And  vs.  Knife River

Medical Equipment And

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Medical Equipment And has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Medical Equipment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Knife River

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Knife River has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Medical Equipment and Knife River

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

The idea behind Medical Equipment And and Knife River 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.