Correlation Between Kingfa Science and Data Patterns

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

Diversification Opportunities for Kingfa Science and Data Patterns

0.67

Correlation Coefficient

Kingfa Science  Data Patterns

Poor diversification

The 3 months correlation between Kingfa and Data is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Kingfa Science Technology and Data Patterns Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Data Patterns 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 Data Patterns. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Data Patterns Limited has no effect on the direction of Kingfa Science i.e., Kingfa Science and Data Patterns go up and down completely randomly.

Pair Corralation between Kingfa Science and Data Patterns

Assuming the 90 days trading horizon Kingfa Science Technology is expected to generate 0.92 times more return on investment than Data Patterns. However, Kingfa Science Technology is 1.09 times less risky than Data Patterns. It trades about -0.02 of its potential returns per unit of risk. Data Patterns Limited is currently generating about -0.24 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	Significant
Accuracy	100.0%
Values	Daily Returns

Kingfa Science Technology  vs.  Data Patterns 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 current stock price disturbance, may contribute to short-term losses for the investors.

Data Patterns Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Data Patterns Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Kingfa Science and Data Patterns

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

The idea behind Kingfa Science Technology and Data Patterns 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.