Correlation Between Kingdee International and HF FOODS

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

Diversification Opportunities for Kingdee International and HF FOODS

0.34

Correlation Coefficient

Kingdee International  HF FOODS

Weak diversification

The 3 months correlation between Kingdee and 3GX is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Kingdee International Software and HF FOODS GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HF FOODS GRP 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 HF FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HF FOODS GRP has no effect on the direction of Kingdee International i.e., Kingdee International and HF FOODS go up and down completely randomly.

Pair Corralation between Kingdee International and HF FOODS

Assuming the 90 days trading horizon Kingdee International Software is expected to generate 1.06 times more return on investment than HF FOODS. However, Kingdee International is 1.06 times more volatile than HF FOODS GRP. It trades about 0.01 of its potential returns per unit of risk. HF FOODS GRP is currently generating about -0.03 per unit of risk. If you would invest  113.00  in Kingdee International Software on October 6, 2024 and sell it today you would lose (14.00) from holding Kingdee International Software or give up 12.39% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

Kingdee International Software  vs.  HF FOODS GRP

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 uncertain performance in the last few months, the Stock's forward indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

HF FOODS GRP

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HF FOODS GRP are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, HF FOODS 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 HF FOODS

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

The idea behind Kingdee International Software and HF FOODS GRP 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.