Correlation Between Kingdee International and Guidewire Software
Can any of the company-specific risk be diversified away by investing in both Kingdee International and Guidewire Software 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 Kingdee International and Guidewire Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kingdee International Software and Guidewire Software, you can compare the effects of market volatilities on Kingdee International and Guidewire Software 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 Kingdee International with a short position of Guidewire Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kingdee International and Guidewire Software.
Diversification Opportunities for Kingdee International and Guidewire Software
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Kingdee and Guidewire is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Kingdee International Software and Guidewire Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidewire Software and Kingdee International 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 Kingdee International Software are associated (or correlated) with Guidewire Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidewire Software has no effect on the direction of Kingdee International i.e., Kingdee International and Guidewire Software go up and down completely randomly.
Pair Corralation between Kingdee International and Guidewire Software
Assuming the 90 days trading horizon Kingdee International Software is expected to generate 0.8 times more return on investment than Guidewire Software. However, Kingdee International Software is 1.25 times less risky than Guidewire Software. It trades about 0.06 of its potential returns per unit of risk. Guidewire Software is currently generating about -0.2 per unit of risk. If you would invest 104.00 in Kingdee International Software on October 4, 2024 and sell it today you would earn a total of 3.00 from holding Kingdee International Software or generate 2.88% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Kingdee International Software vs. Guidewire Software
Performance |
Timeline |
Kingdee International |
Guidewire Software |
Kingdee International and Guidewire Software Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Kingdee International and Guidewire Software
The main advantage of trading using opposite Kingdee International and Guidewire Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kingdee International position performs unexpectedly, Guidewire Software 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 Guidewire Software will offset losses from the drop in Guidewire Software's long position.Kingdee International vs. Intuit Inc | Kingdee International vs. Palo Alto Networks | Kingdee International vs. Cadence Design Systems | Kingdee International vs. Superior Plus Corp |
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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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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