Correlation Between Beta Drugs and Kingfa Science

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

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

Diversification Opportunities for Beta Drugs and Kingfa Science

0.08

Correlation Coefficient

Beta Drugs  Kingfa Science

Significant diversification

The 3 months correlation between Beta and Kingfa is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Beta Drugs 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 Beta Drugs 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 Beta Drugs 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 Beta Drugs i.e., Beta Drugs and Kingfa Science go up and down completely randomly.

Pair Corralation between Beta Drugs and Kingfa Science

Assuming the 90 days trading horizon Beta Drugs is expected to generate 1.12 times more return on investment than Kingfa Science. However, Beta Drugs is 1.12 times more volatile than Kingfa Science Technology. It trades about 0.07 of its potential returns per unit of risk. Kingfa Science Technology is currently generating about 0.01 per unit of risk. If you would invest  168,235  in Beta Drugs on October 25, 2024 and sell it today you would earn a total of  19,260  from holding Beta Drugs or generate 11.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Beta Drugs  vs.  Kingfa Science Technology

Beta Drugs

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Beta Drugs are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Beta Drugs unveiled solid returns over the last few months and may actually be approaching a breakup point.

Kingfa Science Technology

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kingfa Science Technology are ranked lower than 1 (%) 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 recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Beta Drugs and Kingfa Science

The main advantage of trading using opposite Beta Drugs and Kingfa Science positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beta Drugs 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 Beta Drugs 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.