Correlation Between Vardhman Holdings and Kingfa Science

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

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

Diversification Opportunities for Vardhman Holdings and Kingfa Science

-0.4

Correlation Coefficient

Vardhman Holdings  Kingfa Science

Very good diversification

The 3 months correlation between Vardhman and Kingfa is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Vardhman Holdings 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 Vardhman Holdings 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 Vardhman Holdings 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 Vardhman Holdings i.e., Vardhman Holdings and Kingfa Science go up and down completely randomly.

Pair Corralation between Vardhman Holdings and Kingfa Science

Assuming the 90 days trading horizon Vardhman Holdings Limited is expected to under-perform the Kingfa Science. But the stock apears to be less risky and, when comparing its historical volatility, Vardhman Holdings Limited is 1.49 times less risky than Kingfa Science. The stock trades about -0.26 of its potential returns per unit of risk. The Kingfa Science Technology is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest  293,965  in Kingfa Science Technology on September 25, 2024 and sell it today you would earn a total of  53,790  from holding Kingfa Science Technology or generate 18.3% return on investment over 90 days.

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

Vardhman Holdings Limited  vs.  Kingfa Science Technology

Vardhman Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vardhman Holdings Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Vardhman Holdings is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Kingfa Science Technology

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kingfa Science Technology are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating 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 Vardhman Holdings and Kingfa Science

The main advantage of trading using opposite Vardhman Holdings and Kingfa Science positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vardhman Holdings 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 Vardhman Holdings 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.