Correlation Between Kingfa Science and SBI Life

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

Diversification Opportunities for Kingfa Science and SBI Life

-0.18

Correlation Coefficient

Kingfa Science  SBI Life

Good diversification

The 3 months correlation between Kingfa and SBI is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Kingfa Science Technology and SBI Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBI Life Insurance 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 SBI Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBI Life Insurance has no effect on the direction of Kingfa Science i.e., Kingfa Science and SBI Life go up and down completely randomly.

Pair Corralation between Kingfa Science and SBI Life

Assuming the 90 days trading horizon Kingfa Science Technology is expected to under-perform the SBI Life. In addition to that, Kingfa Science is 2.1 times more volatile than SBI Life Insurance. It trades about -0.09 of its total potential returns per unit of risk. SBI Life Insurance is currently generating about 0.12 per unit of volatility. If you would invest  140,637  in SBI Life Insurance on December 26, 2024 and sell it today you would earn a total of  15,083  from holding SBI Life Insurance or generate 10.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Kingfa Science Technology  vs.  SBI Life Insurance

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 uncertain 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.

SBI Life Insurance

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SBI Life Insurance are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady forward indicators, SBI Life may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Kingfa Science and SBI Life

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

The idea behind Kingfa Science Technology and SBI Life Insurance 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.