Correlation Between Speciality Restaurants and Kingfa Science

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

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

Diversification Opportunities for Speciality Restaurants and Kingfa Science

0.38

Correlation Coefficient

Speciality Restaurants  Kingfa Science

Weak diversification

The 3 months correlation between Speciality and Kingfa is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Speciality Restaurants 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 Speciality Restaurants 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 Speciality Restaurants 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 Speciality Restaurants i.e., Speciality Restaurants and Kingfa Science go up and down completely randomly.

Pair Corralation between Speciality Restaurants and Kingfa Science

Assuming the 90 days trading horizon Speciality Restaurants Limited is expected to under-perform the Kingfa Science. But the stock apears to be less risky and, when comparing its historical volatility, Speciality Restaurants Limited is 1.33 times less risky than Kingfa Science. The stock trades about -0.12 of its potential returns per unit of risk. The Kingfa Science Technology is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  309,490  in Kingfa Science Technology on December 2, 2024 and sell it today you would lose (19,920) from holding Kingfa Science Technology or give up 6.44% of portfolio value over 90 days.

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

Speciality Restaurants Limited  vs.  Kingfa Science Technology

Speciality Restaurants

Risk-Adjusted Performance

Very Weak

Over the last 90 days Speciality Restaurants Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's forward indicators remain quite persistent which may send shares a bit higher in April 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

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 current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Speciality Restaurants and Kingfa Science

The main advantage of trading using opposite Speciality Restaurants and Kingfa Science positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Speciality Restaurants 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 Speciality Restaurants 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..