Correlation Between Kingfa Science and Music Broadcast

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

Diversification Opportunities for Kingfa Science and Music Broadcast

0.59

Correlation Coefficient

Kingfa Science  Music Broadcast

Very weak diversification

The 3 months correlation between Kingfa and Music is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Kingfa Science Technology and Music Broadcast Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Music Broadcast 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 Music Broadcast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Music Broadcast has no effect on the direction of Kingfa Science i.e., Kingfa Science and Music Broadcast go up and down completely randomly.

Pair Corralation between Kingfa Science and Music Broadcast

Assuming the 90 days trading horizon Kingfa Science Technology is expected to generate 1.51 times more return on investment than Music Broadcast. However, Kingfa Science is 1.51 times more volatile than Music Broadcast Limited. It trades about -0.02 of its potential returns per unit of risk. Music Broadcast Limited is currently generating about -0.19 per unit of risk. If you would invest  309,490  in Kingfa Science Technology on December 1, 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	Weak
Accuracy	100.0%
Values	Daily Returns

Kingfa Science Technology  vs.  Music Broadcast 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 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.

Music Broadcast

Risk-Adjusted Performance

Very Weak

Over the last 90 days Music Broadcast Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Kingfa Science and Music Broadcast

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

The idea behind Kingfa Science Technology and Music Broadcast 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.