Correlation Between PC Jeweller and Kingfa Science

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

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

Diversification Opportunities for PC Jeweller and Kingfa Science

-0.13

Correlation Coefficient

PC Jeweller  Kingfa Science

Good diversification

The 3 months correlation between PCJEWELLER and Kingfa is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding PC Jeweller 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 PC Jeweller 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 PC Jeweller 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 PC Jeweller i.e., PC Jeweller and Kingfa Science go up and down completely randomly.

Pair Corralation between PC Jeweller and Kingfa Science

Assuming the 90 days trading horizon PC Jeweller Limited is expected to generate 2.23 times more return on investment than Kingfa Science. However, PC Jeweller is 2.23 times more volatile than Kingfa Science Technology. It trades about 0.06 of its potential returns per unit of risk. Kingfa Science Technology is currently generating about 0.07 per unit of risk. If you would invest  2,875  in PC Jeweller Limited on September 23, 2024 and sell it today you would lose (1,195) from holding PC Jeweller Limited or give up 41.57% of portfolio value over 90 days.

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

PC Jeweller Limited  vs.  Kingfa Science Technology

PC Jeweller Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PC Jeweller Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Kingfa Science Technology

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kingfa Science Technology are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Kingfa Science may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with PC Jeweller and Kingfa Science

The main advantage of trading using opposite PC Jeweller and Kingfa Science positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PC Jeweller 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 PC Jeweller 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.