Correlation Between Air Transport and Kingdee International

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

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

Diversification Opportunities for Air Transport and Kingdee International

0.33

Correlation Coefficient

Air Transport  Kingdee International

Weak diversification

The 3 months correlation between Air and Kingdee is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Air Transport Services and Kingdee International Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingdee International and Air Transport 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 Air Transport Services 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 Air Transport i.e., Air Transport and Kingdee International go up and down completely randomly.

Pair Corralation between Air Transport and Kingdee International

Assuming the 90 days horizon Air Transport Services is expected to generate 0.79 times more return on investment than Kingdee International. However, Air Transport Services is 1.26 times less risky than Kingdee International. It trades about 0.0 of its potential returns per unit of risk. Kingdee International Software is currently generating about -0.01 per unit of risk. If you would invest  2,540  in Air Transport Services on October 22, 2024 and sell it today you would lose (400.00) from holding Air Transport Services or give up 15.75% of portfolio value over 90 days.

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

Air Transport Services  vs.  Kingdee International Software

Air Transport Services

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Air Transport Services are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Air Transport 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 Air Transport and Kingdee International

The main advantage of trading using opposite Air Transport and Kingdee International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Transport 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 Air Transport Services 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.

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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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.