Correlation Between Kingfa Science and Garware Hi

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

Diversification Opportunities for Kingfa Science and Garware Hi

-0.45

Correlation Coefficient

Kingfa Science  Garware Hi

Very good diversification

The 3 months correlation between Kingfa and Garware is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Kingfa Science Technology and Garware Hi Tech Films in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garware Hi Tech 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 Garware Hi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Garware Hi Tech has no effect on the direction of Kingfa Science i.e., Kingfa Science and Garware Hi go up and down completely randomly.

Pair Corralation between Kingfa Science and Garware Hi

Assuming the 90 days trading horizon Kingfa Science Technology is expected to under-perform the Garware Hi. But the stock apears to be less risky and, when comparing its historical volatility, Kingfa Science Technology is 1.65 times less risky than Garware Hi. The stock trades about -0.04 of its potential returns per unit of risk. The Garware Hi Tech Films is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  318,577  in Garware Hi Tech Films on September 12, 2024 and sell it today you would earn a total of  204,088  from holding Garware Hi Tech Films or generate 64.06% return on investment over 90 days.

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

Kingfa Science Technology  vs.  Garware Hi Tech Films

Kingfa Science Technology

Risk-Adjusted Performance

0 of 100

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 newest stock price disturbance, may contribute to short-term losses for the investors.

Garware Hi Tech

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Garware Hi Tech Films are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Garware Hi unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kingfa Science and Garware Hi

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

The idea behind Kingfa Science Technology and Garware Hi Tech Films 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 Global Correlations module to find global opportunities by holding instruments from different markets.