Correlation Between Kingfa Science and Goldstone Technologies

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

Diversification Opportunities for Kingfa Science and Goldstone Technologies

0.47

Correlation Coefficient

Kingfa Science  Goldstone Technologies

Very weak diversification

The 3 months correlation between Kingfa and Goldstone is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Kingfa Science Technology and Goldstone Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldstone Technologies 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 Goldstone Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldstone Technologies has no effect on the direction of Kingfa Science i.e., Kingfa Science and Goldstone Technologies go up and down completely randomly.

Pair Corralation between Kingfa Science and Goldstone Technologies

Assuming the 90 days trading horizon Kingfa Science Technology is expected to generate 0.79 times more return on investment than Goldstone Technologies. However, Kingfa Science Technology is 1.26 times less risky than Goldstone Technologies. It trades about 0.12 of its potential returns per unit of risk. Goldstone Technologies Limited is currently generating about -0.07 per unit of risk. If you would invest  312,330  in Kingfa Science Technology on October 6, 2024 and sell it today you would earn a total of  53,020  from holding Kingfa Science Technology or generate 16.98% 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.  Goldstone Technologies Limited

Kingfa Science Technology

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kingfa Science Technology are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical and fundamental indicators, Kingfa Science sustained solid returns over the last few months and may actually be approaching a breakup point.

Goldstone Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goldstone Technologies 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 technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Kingfa Science and Goldstone Technologies

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

The idea behind Kingfa Science Technology and Goldstone Technologies 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.