Correlation Between Knight Transportation and PAMT P

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

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

Diversification Opportunities for Knight Transportation and PAMT P

0.79

Correlation Coefficient

Knight Transportation  PAMT P

Poor diversification

The 3 months correlation between Knight and PAMT is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Knight Transportation and PAMT P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PAMT P and Knight Transportation 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 Knight Transportation are associated (or correlated) with PAMT P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PAMT P has no effect on the direction of Knight Transportation i.e., Knight Transportation and PAMT P go up and down completely randomly.

Pair Corralation between Knight Transportation and PAMT P

Considering the 90-day investment horizon Knight Transportation is expected to generate 0.6 times more return on investment than PAMT P. However, Knight Transportation is 1.67 times less risky than PAMT P. It trades about 0.02 of its potential returns per unit of risk. PAMT P is currently generating about 0.01 per unit of risk. If you would invest  4,366  in Knight Transportation on May 27, 2025 and sell it today you would earn a total of  57.00  from holding Knight Transportation or generate 1.31% return on investment over 90 days.

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

Knight Transportation  vs.  PAMT P

Knight Transportation

Risk-Adjusted Performance

Weak

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

PAMT P

Risk-Adjusted Performance

Weak

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

Pair Trading with Knight Transportation and PAMT P

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

The idea behind Knight Transportation and PAMT P 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.