Correlation Between Premium Catering and Knight Transportation

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

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

Diversification Opportunities for Premium Catering and Knight Transportation

-0.44

Correlation Coefficient

Premium Catering  Knight Transportation

Very good diversification

The 3 months correlation between Premium and Knight is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Premium Catering Limited and Knight Transportation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knight Transportation and Premium Catering 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 Premium Catering Limited are associated (or correlated) with Knight Transportation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knight Transportation has no effect on the direction of Premium Catering i.e., Premium Catering and Knight Transportation go up and down completely randomly.

Pair Corralation between Premium Catering and Knight Transportation

Allowing for the 90-day total investment horizon Premium Catering Limited is expected to under-perform the Knight Transportation. In addition to that, Premium Catering is 2.71 times more volatile than Knight Transportation. It trades about 0.0 of its total potential returns per unit of risk. Knight Transportation is currently generating about 0.01 per unit of volatility. If you would invest  4,109  in Knight Transportation on May 4, 2025 and sell it today you would earn a total of  20.00  from holding Knight Transportation or generate 0.49% return on investment over 90 days.

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

Premium Catering Limited  vs.  Knight Transportation

Premium Catering

Risk-Adjusted Performance

Very Weak

Over the last 90 days Premium Catering Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Premium Catering is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

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.

Pair Trading with Premium Catering and Knight Transportation

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

The idea behind Premium Catering Limited and Knight Transportation 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.