Correlation Between Kingfa Science and Amrutanjan Health

Can any of the company-specific risk be diversified away by investing in both Kingfa Science and Amrutanjan Health 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 Amrutanjan Health 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 Amrutanjan Health Care, you can compare the effects of market volatilities on Kingfa Science and Amrutanjan Health 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 Amrutanjan Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kingfa Science and Amrutanjan Health.

Diversification Opportunities for Kingfa Science and Amrutanjan Health

0.82

Correlation Coefficient

Kingfa Science  Amrutanjan Health

Very poor diversification

The 3 months correlation between Kingfa and Amrutanjan is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Kingfa Science Technology and Amrutanjan Health Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amrutanjan Health Care 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 Amrutanjan Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amrutanjan Health Care has no effect on the direction of Kingfa Science i.e., Kingfa Science and Amrutanjan Health go up and down completely randomly.

Pair Corralation between Kingfa Science and Amrutanjan Health

Assuming the 90 days trading horizon Kingfa Science Technology is expected to generate 1.62 times more return on investment than Amrutanjan Health. However, Kingfa Science is 1.62 times more volatile than Amrutanjan Health Care. It trades about 0.21 of its potential returns per unit of risk. Amrutanjan Health Care is currently generating about 0.24 per unit of risk. If you would invest  289,000  in Kingfa Science Technology on September 16, 2024 and sell it today you would earn a total of  28,455  from holding Kingfa Science Technology or generate 9.85% return on investment over 90 days.

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

Kingfa Science Technology  vs.  Amrutanjan Health Care

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.

Amrutanjan Health Care

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amrutanjan Health Care has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward-looking indicators, Amrutanjan Health is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Kingfa Science and Amrutanjan Health

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

The idea behind Kingfa Science Technology and Amrutanjan Health Care 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.