Correlation Between Kingfa Science and Taj GVK

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

Diversification Opportunities for Kingfa Science and Taj GVK

0.05

Correlation Coefficient

Kingfa Science  Taj GVK

Significant diversification

The 3 months correlation between Kingfa and Taj is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Kingfa Science Technology and Taj GVK Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taj GVK Hotels 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 Taj GVK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taj GVK Hotels has no effect on the direction of Kingfa Science i.e., Kingfa Science and Taj GVK go up and down completely randomly.

Pair Corralation between Kingfa Science and Taj GVK

Assuming the 90 days trading horizon Kingfa Science Technology is expected to under-perform the Taj GVK. But the stock apears to be less risky and, when comparing its historical volatility, Kingfa Science Technology is 1.03 times less risky than Taj GVK. The stock trades about -0.03 of its potential returns per unit of risk. The Taj GVK Hotels is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  32,430  in Taj GVK Hotels on September 13, 2024 and sell it today you would earn a total of  5,595  from holding Taj GVK Hotels or generate 17.25% return on investment over 90 days.

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

Kingfa Science Technology  vs.  Taj GVK Hotels

Kingfa Science Technology

Risk-Adjusted Performance

0 of 100

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.

Taj GVK Hotels

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Taj GVK Hotels are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical and fundamental indicators, Taj GVK sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kingfa Science and Taj GVK

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

The idea behind Kingfa Science Technology and Taj GVK Hotels 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.