Correlation Between Kingdee International and MOVIE GAMES

Can any of the company-specific risk be diversified away by investing in both Kingdee International and MOVIE GAMES 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 MOVIE GAMES 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 MOVIE GAMES SA, you can compare the effects of market volatilities on Kingdee International and MOVIE GAMES 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 MOVIE GAMES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kingdee International and MOVIE GAMES.

Diversification Opportunities for Kingdee International and MOVIE GAMES

-0.6

Correlation Coefficient

Kingdee International  MOVIE GAMES

Excellent diversification

The 3 months correlation between Kingdee and MOVIE is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Kingdee International Software and MOVIE GAMES SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MOVIE GAMES SA 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 MOVIE GAMES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MOVIE GAMES SA has no effect on the direction of Kingdee International i.e., Kingdee International and MOVIE GAMES go up and down completely randomly.

Pair Corralation between Kingdee International and MOVIE GAMES

Assuming the 90 days trading horizon Kingdee International is expected to generate 18.89 times less return on investment than MOVIE GAMES. But when comparing it to its historical volatility, Kingdee International Software is 1.74 times less risky than MOVIE GAMES. It trades about 0.01 of its potential returns per unit of risk. MOVIE GAMES SA is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  356.00  in MOVIE GAMES SA on October 25, 2024 and sell it today you would earn a total of  41.00  from holding MOVIE GAMES SA or generate 11.52% return on investment over 90 days.

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

Kingdee International Software  vs.  MOVIE GAMES SA

Kingdee International

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kingdee International Software are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain forward indicators, Kingdee International reported solid returns over the last few months and may actually be approaching a breakup point.

MOVIE GAMES SA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MOVIE GAMES SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, MOVIE GAMES is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Kingdee International and MOVIE GAMES

The main advantage of trading using opposite Kingdee International and MOVIE GAMES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kingdee International position performs unexpectedly, MOVIE GAMES 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 MOVIE GAMES will offset losses from the drop in MOVIE GAMES's long position.

The idea behind Kingdee International Software and MOVIE GAMES SA 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.