Correlation Between Knights Group and GenIP PLC

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

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

Diversification Opportunities for Knights Group and GenIP PLC

0.41

Correlation Coefficient

Knights Group  GenIP PLC

Very weak diversification

The 3 months correlation between Knights and GenIP is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Knights Group Holdings and GenIP PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GenIP PLC and Knights Group 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 Knights Group Holdings are associated (or correlated) with GenIP PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GenIP PLC has no effect on the direction of Knights Group i.e., Knights Group and GenIP PLC go up and down completely randomly.

Pair Corralation between Knights Group and GenIP PLC

Assuming the 90 days trading horizon Knights Group Holdings is expected to generate 0.77 times more return on investment than GenIP PLC. However, Knights Group Holdings is 1.29 times less risky than GenIP PLC. It trades about 0.12 of its potential returns per unit of risk. GenIP PLC is currently generating about 0.01 per unit of risk. If you would invest  13,000  in Knights Group Holdings on April 24, 2025 and sell it today you would earn a total of  3,300  from holding Knights Group Holdings or generate 25.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Knights Group Holdings  vs.  GenIP PLC

Knights Group Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Knights Group Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Knights Group exhibited solid returns over the last few months and may actually be approaching a breakup point.

GenIP PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days GenIP PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, GenIP PLC is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Knights Group and GenIP PLC

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

The idea behind Knights Group Holdings and GenIP PLC 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.