Correlation Between Kingfa Science and NCC

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

Diversification Opportunities for Kingfa Science and NCC

0.88

Correlation Coefficient

Kingfa Science  NCC

Very poor diversification

The 3 months correlation between Kingfa and NCC is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Kingfa Science Technology and NCC Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NCC 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 NCC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NCC Limited has no effect on the direction of Kingfa Science i.e., Kingfa Science and NCC go up and down completely randomly.

Pair Corralation between Kingfa Science and NCC

Assuming the 90 days trading horizon Kingfa Science Technology is expected to generate 0.86 times more return on investment than NCC. However, Kingfa Science Technology is 1.16 times less risky than NCC. It trades about -0.06 of its potential returns per unit of risk. NCC Limited is currently generating about -0.09 per unit of risk. If you would invest  339,915  in Kingfa Science Technology on December 30, 2024 and sell it today you would lose (44,985) from holding Kingfa Science Technology or give up 13.23% of portfolio value over 90 days.

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

Kingfa Science Technology  vs.  NCC 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 latest unfluctuating performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

NCC Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days NCC Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Kingfa Science and NCC

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

The idea behind Kingfa Science Technology and NCC 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.