The shock modifier of cavalry is about 2x that of infantry for Land tech 1-18 and becomes 4x that of infantry around Land tech 28.
What the pips of units do is to modify the die roll. In a shock or fire phase, a 10-sided die is rolled for each side: this number is shown in the battle view. The offensive pips are added to this roll and the defender's defensive pips are substracted. So a pip roughly represents a 10% increase in offence or defence; don't fall into the trap thinking that a unit with 2 pips is twice as good as a unit with 1 pip.
This means that an offensive shock pip for cavalry is worth much more than one for infantry, as the shock modifier of cavalry is so much higher. For cavalry, you want to have the highest offensive shock pip and ignore offensive fire pip, as cavalry will never have a good fire modifier.
So cavalry does wicked shock damage compared to infantry. However, cavalry (western at least) has very few defensive pip compared to infantry (especially for morale) and thus take more damage. Cavalry also suffers more from terrain penalties. This makes cavalry a bit of a glass cannon and I would advice using 4 of them in a stack with lots of infantry, so that the cavalry can outflank the enemy and not getting damaged in return.
Hope this helps.
If I may quibble, the pips are a little more important than you state using your own numbers. If you roll a 10, then yes, one pip represents a mere 10% increase, but if you roll a one (equally likely), then it's a 100% increase. The average increase across all 10 rolls is 29.2%, so it would be more accurate to state that one pip is about a 30% increase.
However the thrust of this post is spot-on. The shock modifier is the key difference here. If two units have the same fire or shock modifier, then their pips compare at a 1:1 ratio. If not, though, the difference in the modifiers will give the ratio. In other words, since cavalry starts out with a shock modifier 2x as big as the infantry shock modifier, one cavalry shock pip is worth about two infantry shock pips.
Comparing the specific units in question, the Landsknecten Infantry and Latin Knight:
Infantry: 1 off. shock, 2 def. shock, 3 off. morale, 5 def. morale
Knight: 1 off. shock, 0 def. shock, 1 off. morale, 1 def. morale
After factoring the tech modifier what we're actually looking at is:
Infantry: 1 off. shock, 2 def. shock, 3 off. morale, 5 def. morale
Knight: 2 off. shock, 0 def. shock, 1 off. morale, 1 def. morale
So the Latin Knights will do more damage on offense, but much less on defense, and in either case will break rank from morale much quicker than the Landsknechten Infantry. The Infantry is the better baseline unit here, but the Knight is still useful for flanking, provided that you remain within the requirements for the combined arms bonus.
