Correlation Between SIL Investments and Kingfa Science

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

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

Diversification Opportunities for SIL Investments and Kingfa Science

0.83

Correlation Coefficient

SIL Investments  Kingfa Science

Very poor diversification

The 3 months correlation between SIL and Kingfa is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding SIL Investments 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 SIL Investments 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 SIL Investments 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 SIL Investments i.e., SIL Investments and Kingfa Science go up and down completely randomly.

Pair Corralation between SIL Investments and Kingfa Science

Assuming the 90 days trading horizon SIL Investments Limited is expected to generate 1.0 times more return on investment than Kingfa Science. However, SIL Investments is 1.0 times more volatile than Kingfa Science Technology. It trades about -0.08 of its potential returns per unit of risk. Kingfa Science Technology is currently generating about -0.11 per unit of risk. If you would invest  66,025  in SIL Investments Limited on December 24, 2024 and sell it today you would lose (10,745) from holding SIL Investments Limited or give up 16.27% of portfolio value over 90 days.

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

SIL Investments Limited  vs.  Kingfa Science Technology

SIL Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days SIL Investments 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 forward 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.

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 conflicting 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.

Pair Trading with SIL Investments and Kingfa Science

The main advantage of trading using opposite SIL Investments and Kingfa Science positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIL Investments 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 SIL Investments 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.