Correlation Between Kingfa Science and Kalpataru Projects

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

Diversification Opportunities for Kingfa Science and Kalpataru Projects

0.81

Correlation Coefficient

Kingfa Science  Kalpataru Projects

Very poor diversification

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

Pair Corralation between Kingfa Science and Kalpataru Projects

Assuming the 90 days trading horizon Kingfa Science is expected to generate 3.09 times less return on investment than Kalpataru Projects. In addition to that, Kingfa Science is 1.03 times more volatile than Kalpataru Projects International. It trades about 0.01 of its total potential returns per unit of risk. Kalpataru Projects International is currently generating about 0.04 per unit of volatility. If you would invest  127,715  in Kalpataru Projects International on September 19, 2024 and sell it today you would earn a total of  3,720  from holding Kalpataru Projects International or generate 2.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	97.62%
Values	Daily Returns

Kingfa Science Technology  vs.  Kalpataru Projects Internation

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.

Kalpataru Projects

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kalpataru Projects International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Kalpataru Projects is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Kingfa Science and Kalpataru Projects

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

The idea behind Kingfa Science Technology and Kalpataru Projects International 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.