Correlation Between Kingfa Science and FCS Software

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

Diversification Opportunities for Kingfa Science and FCS Software

0.57

Correlation Coefficient

Kingfa Science  FCS Software

Very weak diversification

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

Pair Corralation between Kingfa Science and FCS Software

Assuming the 90 days trading horizon Kingfa Science Technology is expected to under-perform the FCS Software. But the stock apears to be less risky and, when comparing its historical volatility, Kingfa Science Technology is 1.43 times less risky than FCS Software. The stock trades about -0.07 of its potential returns per unit of risk. The FCS Software Solutions is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  366.00  in FCS Software Solutions on September 3, 2024 and sell it today you would lose (27.00) from holding FCS Software Solutions or give up 7.38% of portfolio value over 90 days.

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

Kingfa Science Technology  vs.  FCS Software Solutions

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.

FCS Software Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FCS Software Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, FCS Software is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Kingfa Science and FCS Software

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

The idea behind Kingfa Science Technology and FCS Software Solutions 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.