Correlation Between Hindustan Construction and Kingfa Science

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

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

Diversification Opportunities for Hindustan Construction and Kingfa Science

0.14

Correlation Coefficient

Hindustan Construction  Kingfa Science

Average diversification

The 3 months correlation between Hindustan and Kingfa is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Hindustan Construction 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 Hindustan Construction 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 Hindustan Construction 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 Hindustan Construction i.e., Hindustan Construction and Kingfa Science go up and down completely randomly.

Pair Corralation between Hindustan Construction and Kingfa Science

Assuming the 90 days trading horizon Hindustan Construction is expected to under-perform the Kingfa Science. In addition to that, Hindustan Construction is 1.23 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 0.02 per unit of volatility. If you would invest  303,815  in Kingfa Science Technology on October 24, 2024 and sell it today you would earn a total of  1,960  from holding Kingfa Science Technology or generate 0.65% return on investment over 90 days.

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

Hindustan Construction  vs.  Kingfa Science Technology

Hindustan Construction

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hindustan Construction has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

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 current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Hindustan Construction and Kingfa Science

The main advantage of trading using opposite Hindustan Construction and Kingfa Science positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hindustan Construction 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 Hindustan Construction 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.