Correlation Between Kingfa Science and Dalmia Bharat

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

Diversification Opportunities for Kingfa Science and Dalmia Bharat

-0.01

Correlation Coefficient

Kingfa Science  Dalmia Bharat

Good diversification

The 3 months correlation between Kingfa and Dalmia is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Kingfa Science Technology and Dalmia Bharat Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dalmia Bharat 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 Dalmia Bharat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dalmia Bharat Limited has no effect on the direction of Kingfa Science i.e., Kingfa Science and Dalmia Bharat go up and down completely randomly.

Pair Corralation between Kingfa Science and Dalmia Bharat

Assuming the 90 days trading horizon Kingfa Science is expected to generate 1.33 times less return on investment than Dalmia Bharat. In addition to that, Kingfa Science is 1.64 times more volatile than Dalmia Bharat Limited. It trades about 0.01 of its total potential returns per unit of risk. Dalmia Bharat Limited is currently generating about 0.02 per unit of volatility. If you would invest  179,630  in Dalmia Bharat Limited on October 26, 2024 and sell it today you would earn a total of  3,205  from holding Dalmia Bharat Limited or generate 1.78% return on investment over 90 days.

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

Kingfa Science Technology  vs.  Dalmia Bharat Limited

Kingfa Science Technology

Risk-Adjusted Performance

0 of 100

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.

Dalmia Bharat Limited

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dalmia Bharat Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Dalmia Bharat is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Kingfa Science and Dalmia Bharat

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

The idea behind Kingfa Science Technology and Dalmia Bharat 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.