Correlation Between Allient and Kingdee International

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

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

Diversification Opportunities for Allient and Kingdee International

0.15

Correlation Coefficient

Allient  Kingdee International

Average diversification

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

Pair Corralation between Allient and Kingdee International

Given the investment horizon of 90 days Allient is expected to under-perform the Kingdee International. In addition to that, Allient is 1.7 times more volatile than Kingdee International Software. It trades about -0.15 of its total potential returns per unit of risk. Kingdee International Software is currently generating about -0.22 per unit of volatility. If you would invest  117.00  in Kingdee International Software on October 11, 2024 and sell it today you would lose (7.00) from holding Kingdee International Software or give up 5.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Allient  vs.  Kingdee International Software

Allient

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Allient are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Allient unveiled solid returns over the last few months and may actually be approaching a breakup point.

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 uncertain performance, the Stock's technical and fundamental 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 Allient and Kingdee International

The main advantage of trading using opposite Allient and Kingdee International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allient 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 Allient 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.