Correlation Between Kingfa Science and Ashapura Minechem

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

Diversification Opportunities for Kingfa Science and Ashapura Minechem

0.69

Correlation Coefficient

Kingfa Science  Ashapura Minechem

Poor diversification

The 3 months correlation between Kingfa and Ashapura is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Kingfa Science Technology and Ashapura Minechem Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashapura Minechem 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 Ashapura Minechem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashapura Minechem has no effect on the direction of Kingfa Science i.e., Kingfa Science and Ashapura Minechem go up and down completely randomly.

Pair Corralation between Kingfa Science and Ashapura Minechem

Assuming the 90 days trading horizon Kingfa Science Technology is expected to generate 0.72 times more return on investment than Ashapura Minechem. However, Kingfa Science Technology is 1.38 times less risky than Ashapura Minechem. It trades about 0.25 of its potential returns per unit of risk. Ashapura Minechem Limited is currently generating about 0.17 per unit of risk. If you would invest  323,955  in Kingfa Science Technology on October 11, 2024 and sell it today you would earn a total of  54,300  from holding Kingfa Science Technology or generate 16.76% return on investment over 90 days.

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

Kingfa Science Technology  vs.  Ashapura Minechem Limited

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.

Ashapura Minechem

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ashapura Minechem Limited are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain primary indicators, Ashapura Minechem reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kingfa Science and Ashapura Minechem

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

The idea behind Kingfa Science Technology and Ashapura Minechem Limited 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.