Correlation Between Kingfa Science and Silgo Retail

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

Diversification Opportunities for Kingfa Science and Silgo Retail

0.44

Correlation Coefficient

Kingfa Science  Silgo Retail

Very weak diversification

The 3 months correlation between Kingfa and Silgo is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Kingfa Science Technology and Silgo Retail Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silgo Retail 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 Silgo Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silgo Retail Limited has no effect on the direction of Kingfa Science i.e., Kingfa Science and Silgo Retail go up and down completely randomly.

Pair Corralation between Kingfa Science and Silgo Retail

Assuming the 90 days trading horizon Kingfa Science is expected to generate 1.18 times less return on investment than Silgo Retail. But when comparing it to its historical volatility, Kingfa Science Technology is 1.41 times less risky than Silgo Retail. It trades about 0.06 of its potential returns per unit of risk. Silgo Retail Limited is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,605  in Silgo Retail Limited on September 24, 2024 and sell it today you would earn a total of  1,185  from holding Silgo Retail Limited or generate 45.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.3%
Values	Daily Returns

Kingfa Science Technology  vs.  Silgo Retail Limited

Kingfa Science Technology

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kingfa Science Technology are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Silgo Retail Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Silgo Retail Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Kingfa Science and Silgo Retail

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

The idea behind Kingfa Science Technology and Silgo Retail 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.