Correlation Between FCS Software and Kingfa Science

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

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

Diversification Opportunities for FCS Software and Kingfa Science

0.17

Correlation Coefficient

FCS Software  Kingfa Science

Average diversification

The 3 months correlation between FCS and Kingfa is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding FCS Software Solutions 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 FCS Software 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 FCS Software Solutions 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 FCS Software i.e., FCS Software and Kingfa Science go up and down completely randomly.

Pair Corralation between FCS Software and Kingfa Science

Assuming the 90 days trading horizon FCS Software is expected to generate 2.08 times less return on investment than Kingfa Science. In addition to that, FCS Software is 1.31 times more volatile than Kingfa Science Technology. It trades about 0.03 of its total potential returns per unit of risk. Kingfa Science Technology is currently generating about 0.08 per unit of volatility. If you would invest  129,907  in Kingfa Science Technology on October 5, 2024 and sell it today you would earn a total of  213,593  from holding Kingfa Science Technology or generate 164.42% return on investment over 90 days.

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

FCS Software Solutions  vs.  Kingfa Science Technology

FCS Software Solutions

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FCS Software Solutions are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, FCS Software is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Kingfa Science Technology

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kingfa Science Technology are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical and fundamental indicators, Kingfa Science may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with FCS Software and Kingfa Science

The main advantage of trading using opposite FCS Software and Kingfa Science positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FCS Software 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 FCS Software Solutions 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.