Correlation Between Kingfa Science and Garuda Construction

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

Diversification Opportunities for Kingfa Science and Garuda Construction

0.81

Correlation Coefficient

Kingfa Science  Garuda Construction

Very poor diversification

The 3 months correlation between Kingfa and Garuda is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Kingfa Science Technology and Garuda Construction Engineerin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garuda Construction 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 Garuda Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Garuda Construction has no effect on the direction of Kingfa Science i.e., Kingfa Science and Garuda Construction go up and down completely randomly.

Pair Corralation between Kingfa Science and Garuda Construction

Assuming the 90 days trading horizon Kingfa Science is expected to generate 13.72 times less return on investment than Garuda Construction. But when comparing it to its historical volatility, Kingfa Science Technology is 1.74 times less risky than Garuda Construction. It trades about 0.02 of its potential returns per unit of risk. Garuda Construction Engineering is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  9,492  in Garuda Construction Engineering on October 24, 2024 and sell it today you would earn a total of  3,930  from holding Garuda Construction Engineering or generate 41.4% return on investment over 90 days.

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

Kingfa Science Technology  vs.  Garuda Construction Engineerin

Kingfa Science Technology

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kingfa Science Technology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Garuda Construction

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Garuda Construction Engineering are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Garuda Construction sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kingfa Science and Garuda Construction

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

The idea behind Kingfa Science Technology and Garuda Construction Engineering 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.