Correlation Between Kingfa Science and Bank of Maharashtra

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

Diversification Opportunities for Kingfa Science and Bank of Maharashtra

0.36

Correlation Coefficient

Kingfa Science  Bank of Maharashtra

Weak diversification

The 3 months correlation between Kingfa and Bank is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Kingfa Science Technology and Bank of Maharashtra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Maharashtra 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 Bank of Maharashtra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Maharashtra has no effect on the direction of Kingfa Science i.e., Kingfa Science and Bank of Maharashtra go up and down completely randomly.

Pair Corralation between Kingfa Science and Bank of Maharashtra

Assuming the 90 days trading horizon Kingfa Science Technology is expected to generate 1.24 times more return on investment than Bank of Maharashtra. However, Kingfa Science is 1.24 times more volatile than Bank of Maharashtra. It trades about -0.02 of its potential returns per unit of risk. Bank of Maharashtra is currently generating about -0.11 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.  Bank of Maharashtra

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.

Bank of Maharashtra

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bank of Maharashtra 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 basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Kingfa Science and Bank of Maharashtra

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

The idea behind Kingfa Science Technology and Bank of Maharashtra 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.