Correlation Between Kingfa Science and Sasken Technologies

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

Diversification Opportunities for Kingfa Science and Sasken Technologies

0.85

Correlation Coefficient

Kingfa Science  Sasken Technologies

Very poor diversification

The 3 months correlation between Kingfa and Sasken is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Kingfa Science Technology and Sasken Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sasken Technologies 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 Sasken Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sasken Technologies has no effect on the direction of Kingfa Science i.e., Kingfa Science and Sasken Technologies go up and down completely randomly.

Pair Corralation between Kingfa Science and Sasken Technologies

Assuming the 90 days trading horizon Kingfa Science Technology is expected to generate 0.9 times more return on investment than Sasken Technologies. However, Kingfa Science Technology is 1.11 times less risky than Sasken Technologies. It trades about -0.09 of its potential returns per unit of risk. Sasken Technologies Limited is currently generating about -0.14 per unit of risk. If you would invest  342,515  in Kingfa Science Technology on December 27, 2024 and sell it today you would lose (61,980) from holding Kingfa Science Technology or give up 18.1% 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.  Sasken Technologies 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 weak performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Sasken Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sasken Technologies Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's forward-looking signals remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Kingfa Science and Sasken Technologies

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

The idea behind Kingfa Science Technology and Sasken Technologies 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.