Correlation Between Kingfa Science and Bajaj Finance

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

Diversification Opportunities for Kingfa Science and Bajaj Finance

0.74

Correlation Coefficient

Kingfa Science  Bajaj Finance

Poor diversification

The 3 months correlation between Kingfa and Bajaj is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Kingfa Science Technology and Bajaj Finance Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bajaj Finance Limited 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 Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bajaj Finance Limited has no effect on the direction of Kingfa Science i.e., Kingfa Science and Bajaj Finance go up and down completely randomly.

Pair Corralation between Kingfa Science and Bajaj Finance

Assuming the 90 days trading horizon Kingfa Science Technology is expected to under-perform the Bajaj Finance. In addition to that, Kingfa Science is 1.44 times more volatile than Bajaj Finance Limited. It trades about -0.05 of its total potential returns per unit of risk. Bajaj Finance Limited is currently generating about -0.02 per unit of volatility. If you would invest  734,575  in Bajaj Finance Limited on September 14, 2024 and sell it today you would lose (21,995) from holding Bajaj Finance Limited or give up 2.99% of portfolio value over 90 days.

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

Kingfa Science Technology  vs.  Bajaj Finance 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 uncertain 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 Finance Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bajaj Finance Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Bajaj Finance is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kingfa Science and Bajaj Finance

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

The idea behind Kingfa Science Technology and Bajaj Finance 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.