Correlation Between Kalpataru Projects and Kingfa Science

Can any of the company-specific risk be diversified away by investing in both Kalpataru Projects and Kingfa Science 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 Kalpataru Projects and Kingfa Science into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kalpataru Projects International and Kingfa Science Technology, you can compare the effects of market volatilities on Kalpataru Projects and Kingfa Science 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 Kalpataru Projects with a short position of Kingfa Science. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kalpataru Projects and Kingfa Science.

Diversification Opportunities for Kalpataru Projects and Kingfa Science

0.72

Correlation Coefficient

Kalpataru Projects  Kingfa Science

Poor diversification

The 3 months correlation between Kalpataru and Kingfa is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Kalpataru Projects Internation and Kingfa Science Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingfa Science Technology and Kalpataru Projects 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 Kalpataru Projects International are associated (or correlated) with Kingfa Science. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingfa Science Technology has no effect on the direction of Kalpataru Projects i.e., Kalpataru Projects and Kingfa Science go up and down completely randomly.

Pair Corralation between Kalpataru Projects and Kingfa Science

Assuming the 90 days trading horizon Kalpataru Projects International is expected to generate 0.8 times more return on investment than Kingfa Science. However, Kalpataru Projects International is 1.25 times less risky than Kingfa Science. It trades about 0.11 of its potential returns per unit of risk. Kingfa Science Technology is currently generating about 0.08 per unit of risk. If you would invest  51,063  in Kalpataru Projects International on September 23, 2024 and sell it today you would earn a total of  76,532  from holding Kalpataru Projects International or generate 149.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	78.98%
Values	Daily Returns

Kalpataru Projects Internation  vs.  Kingfa Science Technology

Kalpataru Projects

Risk-Adjusted Performance

0 of 100

Very Weak

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

Kingfa Science Technology

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kingfa Science Technology are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Kingfa Science may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Kalpataru Projects and Kingfa Science

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

The idea behind Kalpataru Projects International and Kingfa Science Technology 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.