Correlation Between Compucom Software and Kingfa Science
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By analyzing existing cross correlation between Compucom Software Limited and Kingfa Science Technology, you can compare the effects of market volatilities on Compucom Software 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 Compucom Software with a short position of Kingfa Science. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compucom Software and Kingfa Science.
Diversification Opportunities for Compucom Software and Kingfa Science
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Compucom and Kingfa is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Compucom Software 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 Compucom Software 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 Compucom Software 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 Compucom Software i.e., Compucom Software and Kingfa Science go up and down completely randomly.
Pair Corralation between Compucom Software and Kingfa Science
Assuming the 90 days trading horizon Compucom Software Limited is expected to generate 1.37 times more return on investment than Kingfa Science. However, Compucom Software is 1.37 times more volatile than Kingfa Science Technology. It trades about -0.01 of its potential returns per unit of risk. Kingfa Science Technology is currently generating about -0.04 per unit of risk. If you would invest 2,839 in Compucom Software Limited on August 28, 2024 and sell it today you would lose (32.00) from holding Compucom Software Limited or give up 1.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compucom Software Limited vs. Kingfa Science Technology
Performance |
| Timeline |
| Compucom Software |
| Kingfa Science Technology |
Compucom Software and Kingfa Science Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compucom Software and Kingfa Science
The main advantage of trading using opposite Compucom Software and Kingfa Science positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compucom Software 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 Compucom Software 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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Check out your portfolio center.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.
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