Correlation Between GLOBUS MEDICAL-A and Kingdee International

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

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

Diversification Opportunities for GLOBUS MEDICAL-A and Kingdee International

0.06

Correlation Coefficient

GLOBUS MEDICAL-A  Kingdee International

Significant diversification

The 3 months correlation between GLOBUS and Kingdee is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding GLOBUS MEDICAL A and Kingdee International Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingdee International and GLOBUS MEDICAL-A 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 GLOBUS MEDICAL A 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 GLOBUS MEDICAL-A i.e., GLOBUS MEDICAL-A and Kingdee International go up and down completely randomly.

Pair Corralation between GLOBUS MEDICAL-A and Kingdee International

Assuming the 90 days trading horizon GLOBUS MEDICAL A is expected to generate 0.52 times more return on investment than Kingdee International. However, GLOBUS MEDICAL A is 1.91 times less risky than Kingdee International. It trades about 0.03 of its potential returns per unit of risk. Kingdee International Software is currently generating about -0.02 per unit of risk. If you would invest  6,650  in GLOBUS MEDICAL A on October 11, 2024 and sell it today you would earn a total of  1,400  from holding GLOBUS MEDICAL A or generate 21.05% return on investment over 90 days.

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

GLOBUS MEDICAL A  vs.  Kingdee International Software

GLOBUS MEDICAL A

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GLOBUS MEDICAL A are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, GLOBUS MEDICAL-A exhibited 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 unsteady 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 GLOBUS MEDICAL-A and Kingdee International

The main advantage of trading using opposite GLOBUS MEDICAL-A and Kingdee International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GLOBUS MEDICAL-A 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 GLOBUS MEDICAL A 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.