Correlation Between Kings Town and Sincere Navigation

Can any of the company-specific risk be diversified away by investing in both Kings Town and Sincere Navigation 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 Kings Town and Sincere Navigation into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kings Town Construction and Sincere Navigation Corp, you can compare the effects of market volatilities on Kings Town and Sincere Navigation 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 Kings Town with a short position of Sincere Navigation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kings Town and Sincere Navigation.

Diversification Opportunities for Kings Town and Sincere Navigation

0.54

Correlation Coefficient

Kings Town  Sincere Navigation

Very weak diversification

The 3 months correlation between Kings and Sincere is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Kings Town Construction and Sincere Navigation Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sincere Navigation Corp and Kings Town 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 Kings Town Construction are associated (or correlated) with Sincere Navigation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sincere Navigation Corp has no effect on the direction of Kings Town i.e., Kings Town and Sincere Navigation go up and down completely randomly.

Pair Corralation between Kings Town and Sincere Navigation

Assuming the 90 days trading horizon Kings Town Construction is expected to under-perform the Sincere Navigation. In addition to that, Kings Town is 2.18 times more volatile than Sincere Navigation Corp. It trades about -0.1 of its total potential returns per unit of risk. Sincere Navigation Corp is currently generating about -0.09 per unit of volatility. If you would invest  2,655  in Sincere Navigation Corp on September 25, 2024 and sell it today you would lose (155.00) from holding Sincere Navigation Corp or give up 5.84% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	97.67%
Values	Daily Returns

Kings Town Construction  vs.  Sincere Navigation Corp

Kings Town Construction

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kings Town Construction has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Sincere Navigation Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sincere Navigation Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Kings Town and Sincere Navigation

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

The idea behind Kings Town Construction and Sincere Navigation Corp 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.