Correlation Between Associated Alcohols and Kingfa Science

Can any of the company-specific risk be diversified away by investing in both Associated Alcohols and Kingfa Science 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 Associated Alcohols and Kingfa Science into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Associated Alcohols Breweries and Kingfa Science Technology, you can compare the effects of market volatilities on Associated Alcohols and Kingfa Science 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 Associated Alcohols with a short position of Kingfa Science. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated Alcohols and Kingfa Science.

Diversification Opportunities for Associated Alcohols and Kingfa Science

0.52

Correlation Coefficient

Associated Alcohols  Kingfa Science

Very weak diversification

The 3 months correlation between Associated and Kingfa is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Associated Alcohols Breweries and Kingfa Science Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingfa Science Technology and Associated Alcohols 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 Associated Alcohols Breweries are associated (or correlated) with Kingfa Science. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingfa Science Technology has no effect on the direction of Associated Alcohols i.e., Associated Alcohols and Kingfa Science go up and down completely randomly.

Pair Corralation between Associated Alcohols and Kingfa Science

Assuming the 90 days trading horizon Associated Alcohols Breweries is expected to generate 1.24 times more return on investment than Kingfa Science. However, Associated Alcohols is 1.24 times more volatile than Kingfa Science Technology. It trades about 0.17 of its potential returns per unit of risk. Kingfa Science Technology is currently generating about 0.14 per unit of risk. If you would invest  89,780  in Associated Alcohols Breweries on September 24, 2024 and sell it today you would earn a total of  18,145  from holding Associated Alcohols Breweries or generate 20.21% return on investment over 90 days.

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

Associated Alcohols Breweries  vs.  Kingfa Science Technology

Associated Alcohols

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Associated Alcohols Breweries are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental indicators, Associated Alcohols may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Kingfa Science Technology

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kingfa Science Technology are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Kingfa Science is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Associated Alcohols and Kingfa Science

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

The idea behind Associated Alcohols Breweries and Kingfa Science Technology 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.