Correlation Between Kingfa Science and CSB Bank

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

Diversification Opportunities for Kingfa Science and CSB Bank

0.46

Correlation Coefficient

Kingfa Science  CSB Bank

Very weak diversification

The 3 months correlation between Kingfa and CSB is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Kingfa Science Technology and CSB Bank Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSB Bank 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 CSB Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSB Bank Limited has no effect on the direction of Kingfa Science i.e., Kingfa Science and CSB Bank go up and down completely randomly.

Pair Corralation between Kingfa Science and CSB Bank

Assuming the 90 days trading horizon Kingfa Science Technology is expected to generate 1.41 times more return on investment than CSB Bank. However, Kingfa Science is 1.41 times more volatile than CSB Bank Limited. It trades about 0.06 of its potential returns per unit of risk. CSB Bank Limited is currently generating about 0.03 per unit of risk. If you would invest  327,355  in Kingfa Science Technology on September 26, 2024 and sell it today you would earn a total of  22,420  from holding Kingfa Science Technology or generate 6.85% return on investment over 90 days.

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

Kingfa Science Technology  vs.  CSB Bank Limited

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 uncertain technical and fundamental indicators, Kingfa Science may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CSB Bank Limited

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CSB Bank Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, CSB Bank is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Kingfa Science and CSB Bank

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

The idea behind Kingfa Science Technology and CSB Bank 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..