Correlation Between Kingfa Science and Trent

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

Diversification Opportunities for Kingfa Science and Trent

0.54

Correlation Coefficient

Kingfa Science  Trent

Very weak diversification

The 3 months correlation between Kingfa and Trent is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Kingfa Science Technology and Trent Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trent 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 Trent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trent Limited has no effect on the direction of Kingfa Science i.e., Kingfa Science and Trent go up and down completely randomly.

Pair Corralation between Kingfa Science and Trent

Assuming the 90 days trading horizon Kingfa Science Technology is expected to under-perform the Trent. In addition to that, Kingfa Science is 1.06 times more volatile than Trent Limited. It trades about -0.03 of its total potential returns per unit of risk. Trent Limited is currently generating about -0.01 per unit of volatility. If you would invest  723,315  in Trent Limited on September 13, 2024 and sell it today you would lose (16,985) from holding Trent Limited or give up 2.35% 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.  Trent 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 newest stock price disturbance, may contribute to short-term losses for the investors.

Trent Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Trent Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Trent is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Kingfa Science and Trent

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

The idea behind Kingfa Science Technology and Trent 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.