Correlation Between Kingfa Science and Som Distilleries

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

Diversification Opportunities for Kingfa Science and Som Distilleries

0.79

Correlation Coefficient

Kingfa Science  Som Distilleries

Poor diversification

The 3 months correlation between Kingfa and Som is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Kingfa Science Technology and Som Distilleries Breweries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Som Distilleries Bre 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 Som Distilleries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Som Distilleries Bre has no effect on the direction of Kingfa Science i.e., Kingfa Science and Som Distilleries go up and down completely randomly.

Pair Corralation between Kingfa Science and Som Distilleries

Assuming the 90 days trading horizon Kingfa Science is expected to generate 1.33 times less return on investment than Som Distilleries. But when comparing it to its historical volatility, Kingfa Science Technology is 1.01 times less risky than Som Distilleries. It trades about 0.16 of its potential returns per unit of risk. Som Distilleries Breweries is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  10,759  in Som Distilleries Breweries on September 12, 2024 and sell it today you would earn a total of  1,144  from holding Som Distilleries Breweries or generate 10.63% return on investment over 90 days.

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

Kingfa Science Technology  vs.  Som Distilleries Breweries

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 newest stock price disturbance, may contribute to short-term losses for the investors.

Som Distilleries Bre

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Som Distilleries Breweries are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Som Distilleries is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Kingfa Science and Som Distilleries

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

The idea behind Kingfa Science Technology and Som Distilleries Breweries 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.

Check out your portfolio center.

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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.