Correlation Between AGF Management and Kingdee International

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

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

Diversification Opportunities for AGF Management and Kingdee International

0.15

Correlation Coefficient

AGF Management  Kingdee International

Average diversification

The 3 months correlation between AGF and Kingdee is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding AGF Management Limited and Kingdee International Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingdee International and AGF Management 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 AGF Management Limited 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 AGF Management i.e., AGF Management and Kingdee International go up and down completely randomly.

Pair Corralation between AGF Management and Kingdee International

Assuming the 90 days horizon AGF Management Limited is expected to generate 0.49 times more return on investment than Kingdee International. However, AGF Management Limited is 2.06 times less risky than Kingdee International. It trades about -0.13 of its potential returns per unit of risk. Kingdee International Software is currently generating about -0.57 per unit of risk. If you would invest  730.00  in AGF Management Limited on October 9, 2024 and sell it today you would lose (20.00) from holding AGF Management Limited or give up 2.74% of portfolio value over 90 days.

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

AGF Management Limited  vs.  Kingdee International Software

AGF Management

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AGF Management Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AGF Management may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Kingdee International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kingdee International Software has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's forward indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with AGF Management and Kingdee International

The main advantage of trading using opposite AGF Management and Kingdee International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGF Management 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 AGF Management Limited 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.