Correlation Between Kingfa Science and ICICI Securities

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

Diversification Opportunities for Kingfa Science and ICICI Securities

0.3

Correlation Coefficient

Kingfa Science  ICICI Securities

Weak diversification

The 3 months correlation between Kingfa and ICICI is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Kingfa Science Technology and ICICI Securities Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICICI Securities 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 ICICI Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICICI Securities has no effect on the direction of Kingfa Science i.e., Kingfa Science and ICICI Securities go up and down completely randomly.

Pair Corralation between Kingfa Science and ICICI Securities

Assuming the 90 days trading horizon Kingfa Science Technology is expected to generate 3.12 times more return on investment than ICICI Securities. However, Kingfa Science is 3.12 times more volatile than ICICI Securities Limited. It trades about -0.02 of its potential returns per unit of risk. ICICI Securities Limited is currently generating about -0.13 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	Very Weak
Accuracy	100.0%
Values	Daily Returns

Kingfa Science Technology  vs.  ICICI Securities 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.

ICICI Securities

Risk-Adjusted Performance

Very Weak

Over the last 90 days ICICI Securities Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Kingfa Science and ICICI Securities

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

The idea behind Kingfa Science Technology and ICICI Securities 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.