Correlation Between Kingfa Science and Rico Auto

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

Diversification Opportunities for Kingfa Science and Rico Auto

0.21

Correlation Coefficient

Kingfa Science  Rico Auto

Modest diversification

The 3 months correlation between Kingfa and Rico is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Kingfa Science Technology and Rico Auto Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rico Auto Industries 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 Rico Auto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rico Auto Industries has no effect on the direction of Kingfa Science i.e., Kingfa Science and Rico Auto go up and down completely randomly.

Pair Corralation between Kingfa Science and Rico Auto

Assuming the 90 days trading horizon Kingfa Science is expected to generate 1.35 times less return on investment than Rico Auto. But when comparing it to its historical volatility, Kingfa Science Technology is 1.04 times less risky than Rico Auto. It trades about 0.07 of its potential returns per unit of risk. Rico Auto Industries is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  6,142  in Rico Auto Industries on May 6, 2025 and sell it today you would earn a total of  898.00  from holding Rico Auto Industries or generate 14.62% return on investment over 90 days.

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

Kingfa Science Technology  vs.  Rico Auto Industries

Kingfa Science Technology

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kingfa Science Technology are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical and fundamental indicators, Kingfa Science may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Rico Auto Industries

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rico Auto Industries are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Rico Auto unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kingfa Science and Rico Auto

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

The idea behind Kingfa Science Technology and Rico Auto Industries 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.