Correlation Between Engineers India and Kingfa Science

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

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

Diversification Opportunities for Engineers India and Kingfa Science

0.11

Correlation Coefficient

Engineers India  Kingfa Science

Average diversification

The 3 months correlation between Engineers and Kingfa is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Engineers India 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 Engineers India 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 Engineers India 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 Engineers India i.e., Engineers India and Kingfa Science go up and down completely randomly.

Pair Corralation between Engineers India and Kingfa Science

Assuming the 90 days trading horizon Engineers India Limited is expected to under-perform the Kingfa Science. But the stock apears to be less risky and, when comparing its historical volatility, Engineers India Limited is 1.1 times less risky than Kingfa Science. The stock trades about -0.05 of its potential returns per unit of risk. The Kingfa Science Technology is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  333,345  in Kingfa Science Technology on October 11, 2024 and sell it today you would earn a total of  44,910  from holding Kingfa Science Technology or generate 13.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Engineers India Limited  vs.  Kingfa Science Technology

Engineers India

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Engineers India Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Kingfa Science Technology

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kingfa Science Technology are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Kingfa Science sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Engineers India and Kingfa Science

The main advantage of trading using opposite Engineers India and Kingfa Science positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Engineers India 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 Engineers India 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.