Correlation Between Kingfa Science and Bajaj Healthcare

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

Diversification Opportunities for Kingfa Science and Bajaj Healthcare

0.16

Correlation Coefficient

Kingfa Science  Bajaj Healthcare

Average diversification

The 3 months correlation between Kingfa and Bajaj is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Kingfa Science Technology and Bajaj Healthcare Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bajaj Healthcare 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 Bajaj Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bajaj Healthcare has no effect on the direction of Kingfa Science i.e., Kingfa Science and Bajaj Healthcare go up and down completely randomly.

Pair Corralation between Kingfa Science and Bajaj Healthcare

Assuming the 90 days trading horizon Kingfa Science Technology is expected to under-perform the Bajaj Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, Kingfa Science Technology is 1.35 times less risky than Bajaj Healthcare. The stock trades about -0.05 of its potential returns per unit of risk. The Bajaj Healthcare Limited is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  38,219  in Bajaj Healthcare Limited on September 16, 2024 and sell it today you would earn a total of  4,016  from holding Bajaj Healthcare Limited or generate 10.51% return on investment over 90 days.

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

Kingfa Science Technology  vs.  Bajaj Healthcare Limited

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.

Bajaj Healthcare

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bajaj Healthcare Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Bajaj Healthcare may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Kingfa Science and Bajaj Healthcare

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

The idea behind Kingfa Science Technology and Bajaj Healthcare 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.