Correlation Between Kingfa Science and GTL

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

Diversification Opportunities for Kingfa Science and GTL

0.68

Correlation Coefficient

Kingfa Science  GTL

Poor diversification

The 3 months correlation between Kingfa and GTL is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Kingfa Science Technology and GTL Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GTL 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 GTL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GTL Limited has no effect on the direction of Kingfa Science i.e., Kingfa Science and GTL go up and down completely randomly.

Pair Corralation between Kingfa Science and GTL

Assuming the 90 days trading horizon Kingfa Science Technology is expected to under-perform the GTL. But the stock apears to be less risky and, when comparing its historical volatility, Kingfa Science Technology is 2.1 times less risky than GTL. The stock trades about -0.03 of its potential returns per unit of risk. The GTL Limited is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,373  in GTL Limited on September 2, 2024 and sell it today you would lose (86.00) from holding GTL Limited or give up 6.26% of portfolio value over 90 days.

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

Kingfa Science Technology  vs.  GTL Limited

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 somewhat strong technical and fundamental indicators, Kingfa Science is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

GTL Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GTL Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, GTL is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Kingfa Science and GTL

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

The idea behind Kingfa Science Technology and GTL 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 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.