Correlation Between Kingfa Science and MSP Steel

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

Diversification Opportunities for Kingfa Science and MSP Steel

0.53

Correlation Coefficient

Kingfa Science  MSP Steel

Very weak diversification

The 3 months correlation between Kingfa and MSP is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Kingfa Science Technology and MSP Steel Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MSP Steel Power 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 MSP Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MSP Steel Power has no effect on the direction of Kingfa Science i.e., Kingfa Science and MSP Steel go up and down completely randomly.

Pair Corralation between Kingfa Science and MSP Steel

Assuming the 90 days trading horizon Kingfa Science is expected to generate 1.46 times less return on investment than MSP Steel. In addition to that, Kingfa Science is 1.0 times more volatile than MSP Steel Power. It trades about 0.09 of its total potential returns per unit of risk. MSP Steel Power is currently generating about 0.12 per unit of volatility. If you would invest  950.00  in MSP Steel Power on October 3, 2024 and sell it today you would earn a total of  3,553  from holding MSP Steel Power or generate 374.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Kingfa Science Technology  vs.  MSP Steel Power

Kingfa Science Technology

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kingfa Science Technology are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical and fundamental indicators, Kingfa Science may actually be approaching a critical reversion point that can send shares even higher in February 2025.

MSP Steel Power

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MSP Steel Power has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Kingfa Science and MSP Steel

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

The idea behind Kingfa Science Technology and MSP Steel Power 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.