Correlation Between Kingfa Science and Eros International

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

Diversification Opportunities for Kingfa Science and Eros International

0.4

Correlation Coefficient

Kingfa Science  Eros International

Very weak diversification

The 3 months correlation between Kingfa and Eros is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Kingfa Science Technology and Eros International Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eros International Media 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 Eros International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eros International Media has no effect on the direction of Kingfa Science i.e., Kingfa Science and Eros International go up and down completely randomly.

Pair Corralation between Kingfa Science and Eros International

Assuming the 90 days trading horizon Kingfa Science Technology is expected to generate 1.29 times more return on investment than Eros International. However, Kingfa Science is 1.29 times more volatile than Eros International Media. It trades about 0.34 of its potential returns per unit of risk. Eros International Media is currently generating about 0.08 per unit of risk. If you would invest  293,965  in Kingfa Science Technology on September 25, 2024 and sell it today you would earn a total of  53,790  from holding Kingfa Science Technology or generate 18.3% return on investment over 90 days.

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

Kingfa Science Technology  vs.  Eros International Media

Kingfa Science Technology

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kingfa Science Technology are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating technical and fundamental indicators, Kingfa Science may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Eros International Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eros International Media 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 fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Kingfa Science and Eros International

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

The idea behind Kingfa Science Technology and Eros International Media 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.