Correlation Between Chalet Hotels and Kingfa Science

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

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

Diversification Opportunities for Chalet Hotels and Kingfa Science

0.44

Correlation Coefficient

Chalet Hotels  Kingfa Science

Very weak diversification

The 3 months correlation between Chalet and Kingfa is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Chalet Hotels Limited 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 Chalet Hotels 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 Chalet Hotels Limited 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 Chalet Hotels i.e., Chalet Hotels and Kingfa Science go up and down completely randomly.

Pair Corralation between Chalet Hotels and Kingfa Science

Assuming the 90 days trading horizon Chalet Hotels Limited is expected to generate 0.98 times more return on investment than Kingfa Science. However, Chalet Hotels Limited is 1.02 times less risky than Kingfa Science. It trades about 0.04 of its potential returns per unit of risk. Kingfa Science Technology is currently generating about -0.07 per unit of risk. If you would invest  85,575  in Chalet Hotels Limited on August 31, 2024 and sell it today you would earn a total of  3,765  from holding Chalet Hotels Limited or generate 4.4% return on investment over 90 days.

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

Chalet Hotels Limited  vs.  Kingfa Science Technology

Chalet Hotels Limited

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Chalet Hotels Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, Chalet Hotels is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Kingfa Science Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kingfa Science Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Chalet Hotels and Kingfa Science

The main advantage of trading using opposite Chalet Hotels and Kingfa Science positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chalet Hotels 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 Chalet Hotels Limited 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 CEOs Directory module to screen CEOs from public companies around the world.