Correlation Between Kingfa Science and Bandhan Bank

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

Diversification Opportunities for Kingfa Science and Bandhan Bank

0.54

Correlation Coefficient

Kingfa Science  Bandhan Bank

Very weak diversification

The 3 months correlation between Kingfa and Bandhan is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Kingfa Science Technology and Bandhan Bank Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bandhan Bank 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 Bandhan Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bandhan Bank Limited has no effect on the direction of Kingfa Science i.e., Kingfa Science and Bandhan Bank go up and down completely randomly.

Pair Corralation between Kingfa Science and Bandhan Bank

Assuming the 90 days trading horizon Kingfa Science Technology is expected to generate 1.51 times more return on investment than Bandhan Bank. However, Kingfa Science is 1.51 times more volatile than Bandhan Bank Limited. It trades about -0.02 of its potential returns per unit of risk. Bandhan Bank Limited is currently generating about -0.13 per unit of risk. If you would invest  309,490  in Kingfa Science Technology on December 2, 2024 and sell it today you would lose (19,920) from holding Kingfa Science Technology or give up 6.44% of portfolio value over 90 days.

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

Kingfa Science Technology  vs.  Bandhan Bank Limited

Kingfa Science Technology

Risk-Adjusted Performance

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 somewhat strong technical and fundamental indicators, Kingfa Science is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Bandhan Bank Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bandhan Bank Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental drivers remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Kingfa Science and Bandhan Bank

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

The idea behind Kingfa Science Technology and Bandhan Bank 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.