Correlation Between Kingfa Science and Visa Steel

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Can any of the company-specific risk be diversified away by investing in both Kingfa Science and Visa Steel 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 Kingfa Science and Visa Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kingfa Science Technology and Visa Steel Limited, you can compare the effects of market volatilities on Kingfa Science and Visa Steel 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 Kingfa Science with a short position of Visa Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kingfa Science and Visa Steel.

Diversification Opportunities for Kingfa Science and Visa Steel

-0.31
  Correlation Coefficient

Very good diversification

The 3 months correlation between Kingfa and Visa is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Kingfa Science Technology and Visa Steel Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Visa Steel Limited and Kingfa Science 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 Kingfa Science Technology are associated (or correlated) with Visa Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Visa Steel Limited has no effect on the direction of Kingfa Science i.e., Kingfa Science and Visa Steel go up and down completely randomly.

Pair Corralation between Kingfa Science and Visa Steel

Assuming the 90 days trading horizon Kingfa Science Technology is expected to generate 1.21 times more return on investment than Visa Steel. However, Kingfa Science is 1.21 times more volatile than Visa Steel Limited. It trades about 0.16 of its potential returns per unit of risk. Visa Steel Limited is currently generating about -0.32 per unit of risk. If you would invest  289,000  in Kingfa Science Technology on September 19, 2024 and sell it today you would earn a total of  22,520  from holding Kingfa Science Technology or generate 7.79% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Kingfa Science Technology  vs.  Visa Steel Limited

 Performance 
       Timeline  
Kingfa Science Technology 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 newest stock price disturbance, may contribute to short-term losses for the investors.
Visa Steel Limited 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Visa Steel Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Visa Steel is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Kingfa Science and Visa Steel Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Kingfa Science and Visa Steel

The main advantage of trading using opposite Kingfa Science and Visa Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kingfa Science position performs unexpectedly, Visa Steel 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 Visa Steel will offset losses from the drop in Visa Steel's long position.
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The idea behind Kingfa Science Technology and Visa Steel Limited 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

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