Correlation Between AWILCO DRILLING and Kingdee International

Can any of the company-specific risk be diversified away by investing in both AWILCO DRILLING and Kingdee International 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 AWILCO DRILLING and Kingdee International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AWILCO DRILLING PLC and Kingdee International Software, you can compare the effects of market volatilities on AWILCO DRILLING and Kingdee International 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 AWILCO DRILLING with a short position of Kingdee International. Check out your portfolio center. Please also check ongoing floating volatility patterns of AWILCO DRILLING and Kingdee International.

Diversification Opportunities for AWILCO DRILLING and Kingdee International

-0.06

Correlation Coefficient

AWILCO DRILLING  Kingdee International

Good diversification

The 3 months correlation between AWILCO and Kingdee is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding AWILCO DRILLING PLC and Kingdee International Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingdee International and AWILCO DRILLING 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 AWILCO DRILLING PLC are associated (or correlated) with Kingdee International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingdee International has no effect on the direction of AWILCO DRILLING i.e., AWILCO DRILLING and Kingdee International go up and down completely randomly.

Pair Corralation between AWILCO DRILLING and Kingdee International

Assuming the 90 days trading horizon AWILCO DRILLING PLC is expected to generate 1.26 times more return on investment than Kingdee International. However, AWILCO DRILLING is 1.26 times more volatile than Kingdee International Software. It trades about 0.09 of its potential returns per unit of risk. Kingdee International Software is currently generating about 0.04 per unit of risk. If you would invest  174.00  in AWILCO DRILLING PLC on October 22, 2024 and sell it today you would earn a total of  33.00  from holding AWILCO DRILLING PLC or generate 18.97% return on investment over 90 days.

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

AWILCO DRILLING PLC  vs.  Kingdee International Software

AWILCO DRILLING PLC

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AWILCO DRILLING PLC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady forward indicators, AWILCO DRILLING reported solid returns over the last few months and may actually be approaching a breakup point.

Kingdee International

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kingdee International Software are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, Kingdee International may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with AWILCO DRILLING and Kingdee International

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

The idea behind AWILCO DRILLING PLC and Kingdee International Software 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.