Correlation Between Kingdee International and SWISS WATER

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

Diversification Opportunities for Kingdee International and SWISS WATER

-0.06

Correlation Coefficient

Kingdee International  SWISS WATER

Good diversification

The 3 months correlation between Kingdee and SWISS is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Kingdee International Software and SWISS WATER DECAFFCOFFEE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SWISS WATER DECAFFCOFFEE 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 SWISS WATER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SWISS WATER DECAFFCOFFEE has no effect on the direction of Kingdee International i.e., Kingdee International and SWISS WATER go up and down completely randomly.

Pair Corralation between Kingdee International and SWISS WATER

Assuming the 90 days trading horizon Kingdee International Software is expected to under-perform the SWISS WATER. In addition to that, Kingdee International is 1.46 times more volatile than SWISS WATER DECAFFCOFFEE. It trades about -0.02 of its total potential returns per unit of risk. SWISS WATER DECAFFCOFFEE is currently generating about 0.03 per unit of volatility. If you would invest  202.00  in SWISS WATER DECAFFCOFFEE on October 10, 2024 and sell it today you would earn a total of  48.00  from holding SWISS WATER DECAFFCOFFEE or generate 23.76% 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.  SWISS WATER DECAFFCOFFEE

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 nearly stable forward indicators, Kingdee International is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

SWISS WATER DECAFFCOFFEE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SWISS WATER DECAFFCOFFEE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, SWISS WATER is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Kingdee International and SWISS WATER

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

The idea behind Kingdee International Software and SWISS WATER DECAFFCOFFEE 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.