Correlation Between Kingfa Science and Cholamandalam Financial

Can any of the company-specific risk be diversified away by investing in both Kingfa Science and Cholamandalam Financial 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 Cholamandalam Financial 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 Cholamandalam Financial Holdings, you can compare the effects of market volatilities on Kingfa Science and Cholamandalam Financial 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 Cholamandalam Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kingfa Science and Cholamandalam Financial.

Diversification Opportunities for Kingfa Science and Cholamandalam Financial

0.56

Correlation Coefficient

Kingfa Science  Cholamandalam Financial

Very weak diversification

The 3 months correlation between Kingfa and Cholamandalam is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Kingfa Science Technology and Cholamandalam Financial Holdin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cholamandalam Financial 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 Cholamandalam Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cholamandalam Financial has no effect on the direction of Kingfa Science i.e., Kingfa Science and Cholamandalam Financial go up and down completely randomly.

Pair Corralation between Kingfa Science and Cholamandalam Financial

Assuming the 90 days trading horizon Kingfa Science Technology is expected to generate 0.87 times more return on investment than Cholamandalam Financial. However, Kingfa Science Technology is 1.14 times less risky than Cholamandalam Financial. It trades about -0.06 of its potential returns per unit of risk. Cholamandalam Financial Holdings is currently generating about -0.05 per unit of risk. If you would invest  337,365  in Kingfa Science Technology on September 4, 2024 and sell it today you would lose (27,875) from holding Kingfa Science Technology or give up 8.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Kingfa Science Technology  vs.  Cholamandalam Financial Holdin

Kingfa Science Technology

Risk-Adjusted Performance

0 of 100

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 latest uncertain performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Cholamandalam Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cholamandalam Financial Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Kingfa Science and Cholamandalam Financial

The main advantage of trading using opposite Kingfa Science and Cholamandalam Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kingfa Science position performs unexpectedly, Cholamandalam Financial 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 Cholamandalam Financial will offset losses from the drop in Cholamandalam Financial's long position.

The idea behind Kingfa Science Technology and Cholamandalam Financial Holdings 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.