Correlation Between Kingfa Science and Diligent Media

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

Diversification Opportunities for Kingfa Science and Diligent Media

0.57

Correlation Coefficient

Kingfa Science  Diligent Media

Very weak diversification

The 3 months correlation between Kingfa and Diligent is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Kingfa Science Technology and Diligent Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diligent Media 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 Diligent Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diligent Media has no effect on the direction of Kingfa Science i.e., Kingfa Science and Diligent Media go up and down completely randomly.

Pair Corralation between Kingfa Science and Diligent Media

Assuming the 90 days trading horizon Kingfa Science Technology is expected to under-perform the Diligent Media. But the stock apears to be less risky and, when comparing its historical volatility, Kingfa Science Technology is 1.45 times less risky than Diligent Media. The stock trades about -0.01 of its potential returns per unit of risk. The Diligent Media is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  478.00  in Diligent Media on August 31, 2024 and sell it today you would earn a total of  46.00  from holding Diligent Media or generate 9.62% 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.  Diligent Media

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 weak 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.

Diligent Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Diligent Media has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in December 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Kingfa Science and Diligent Media

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

The idea behind Kingfa Science Technology and Diligent Media 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.