Correlation Between NCC and Kingfa Science

Can any of the company-specific risk be diversified away by investing in both NCC and Kingfa Science 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 NCC and Kingfa Science into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NCC Limited and Kingfa Science Technology, you can compare the effects of market volatilities on NCC and Kingfa Science 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 NCC with a short position of Kingfa Science. Check out your portfolio center. Please also check ongoing floating volatility patterns of NCC and Kingfa Science.

Diversification Opportunities for NCC and Kingfa Science

0.88

Correlation Coefficient

NCC  Kingfa Science

Very poor diversification

The 3 months correlation between NCC and Kingfa is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding NCC Limited and Kingfa Science Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingfa Science Technology and NCC 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 NCC Limited are associated (or correlated) with Kingfa Science. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingfa Science Technology has no effect on the direction of NCC i.e., NCC and Kingfa Science go up and down completely randomly.

Pair Corralation between NCC and Kingfa Science

Assuming the 90 days trading horizon NCC Limited is expected to under-perform the Kingfa Science. In addition to that, NCC is 1.16 times more volatile than Kingfa Science Technology. It trades about -0.09 of its total potential returns per unit of risk. Kingfa Science Technology is currently generating about -0.06 per unit of volatility. If you would invest  339,915  in Kingfa Science Technology on December 30, 2024 and sell it today you would lose (44,985) from holding Kingfa Science Technology or give up 13.23% of portfolio value over 90 days.

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

NCC Limited  vs.  Kingfa Science Technology

NCC Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days NCC Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

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 latest unfluctuating performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with NCC and Kingfa Science

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

The idea behind NCC Limited and Kingfa Science Technology 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 Transaction History module to view history of all your transactions and understand their impact on performance.