Correlation Between Kingfa Science and JSW Steel

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

Diversification Opportunities for Kingfa Science and JSW Steel

-0.04

Correlation Coefficient

Kingfa Science  JSW Steel

Good diversification

The 3 months correlation between Kingfa and JSW is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Kingfa Science Technology and JSW Steel Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JSW Steel Limited 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 JSW Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JSW Steel Limited has no effect on the direction of Kingfa Science i.e., Kingfa Science and JSW Steel go up and down completely randomly.

Pair Corralation between Kingfa Science and JSW Steel

Assuming the 90 days trading horizon Kingfa Science Technology is expected to generate 1.93 times more return on investment than JSW Steel. However, Kingfa Science is 1.93 times more volatile than JSW Steel Limited. It trades about 0.08 of its potential returns per unit of risk. JSW Steel Limited is currently generating about 0.04 per unit of risk. If you would invest  136,413  in Kingfa Science Technology on October 8, 2024 and sell it today you would earn a total of  214,567  from holding Kingfa Science Technology or generate 157.29% return on investment over 90 days.

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

Kingfa Science Technology  vs.  JSW Steel Limited

Kingfa Science Technology

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kingfa Science Technology are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Kingfa Science sustained solid returns over the last few months and may actually be approaching a breakup point.

JSW Steel Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JSW Steel Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Kingfa Science and JSW Steel

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

The idea behind Kingfa Science Technology and JSW Steel 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.