Correlation Between Kingfa Science and Agarwal Industrial

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

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

Diversification Opportunities for Kingfa Science and Agarwal Industrial

0.75

Correlation Coefficient

Kingfa Science  Agarwal Industrial

Poor diversification

The 3 months correlation between Kingfa and Agarwal is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Kingfa Science Technology and Agarwal Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agarwal Industrial and Kingfa Science 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 Kingfa Science Technology are associated (or correlated) with Agarwal Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agarwal Industrial has no effect on the direction of Kingfa Science i.e., Kingfa Science and Agarwal Industrial go up and down completely randomly.

Pair Corralation between Kingfa Science and Agarwal Industrial

Assuming the 90 days trading horizon Kingfa Science Technology is expected to generate 1.04 times more return on investment than Agarwal Industrial. However, Kingfa Science is 1.04 times more volatile than Agarwal Industrial. It trades about 0.09 of its potential returns per unit of risk. Agarwal Industrial is currently generating about 0.06 per unit of risk. If you would invest  136,448  in Kingfa Science Technology on October 10, 2024 and sell it today you would earn a total of  248,377  from holding Kingfa Science Technology or generate 182.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.59%
Values	Daily Returns

Kingfa Science Technology  vs.  Agarwal Industrial

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 abnormal technical and fundamental indicators, Kingfa Science sustained solid returns over the last few months and may actually be approaching a breakup point.

Agarwal Industrial

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Agarwal Industrial are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak forward indicators, Agarwal Industrial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Kingfa Science and Agarwal Industrial

The main advantage of trading using opposite Kingfa Science and Agarwal Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kingfa Science position performs unexpectedly, Agarwal Industrial 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 Agarwal Industrial will offset losses from the drop in Agarwal Industrial's long position.

The idea behind Kingfa Science Technology and Agarwal Industrial 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.