Correlation Between Kingstate Electronics and Lotus Pharmaceutical

Can any of the company-specific risk be diversified away by investing in both Kingstate Electronics and Lotus Pharmaceutical 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 Kingstate Electronics and Lotus Pharmaceutical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kingstate Electronics and Lotus Pharmaceutical Co, you can compare the effects of market volatilities on Kingstate Electronics and Lotus Pharmaceutical 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 Kingstate Electronics with a short position of Lotus Pharmaceutical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kingstate Electronics and Lotus Pharmaceutical.

Diversification Opportunities for Kingstate Electronics and Lotus Pharmaceutical

0.37

Correlation Coefficient

Kingstate Electronics  Lotus Pharmaceutical

Weak diversification

The 3 months correlation between Kingstate and Lotus is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Kingstate Electronics and Lotus Pharmaceutical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotus Pharmaceutical and Kingstate Electronics 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 Kingstate Electronics are associated (or correlated) with Lotus Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotus Pharmaceutical has no effect on the direction of Kingstate Electronics i.e., Kingstate Electronics and Lotus Pharmaceutical go up and down completely randomly.

Pair Corralation between Kingstate Electronics and Lotus Pharmaceutical

Assuming the 90 days trading horizon Kingstate Electronics is expected to generate 0.54 times more return on investment than Lotus Pharmaceutical. However, Kingstate Electronics is 1.87 times less risky than Lotus Pharmaceutical. It trades about 0.09 of its potential returns per unit of risk. Lotus Pharmaceutical Co is currently generating about -0.06 per unit of risk. If you would invest  4,200  in Kingstate Electronics on December 25, 2024 and sell it today you would earn a total of  160.00  from holding Kingstate Electronics or generate 3.81% return on investment over 90 days.

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

Kingstate Electronics  vs.  Lotus Pharmaceutical Co

Kingstate Electronics

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kingstate Electronics are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Kingstate Electronics is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Lotus Pharmaceutical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lotus Pharmaceutical Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Lotus Pharmaceutical is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Kingstate Electronics and Lotus Pharmaceutical

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

The idea behind Kingstate Electronics and Lotus Pharmaceutical Co 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.

Check out your portfolio center.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.