Correlation Between Kingdee International and BJs Wholesale

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

Diversification Opportunities for Kingdee International and BJs Wholesale

0.51

Correlation Coefficient

Kingdee International  BJs Wholesale

Very weak diversification

The 3 months correlation between Kingdee and BJs is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Kingdee International Software and BJs Wholesale Club in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BJs Wholesale Club 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 BJs Wholesale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BJs Wholesale Club has no effect on the direction of Kingdee International i.e., Kingdee International and BJs Wholesale go up and down completely randomly.

Pair Corralation between Kingdee International and BJs Wholesale

Assuming the 90 days trading horizon Kingdee International is expected to generate 1.75 times less return on investment than BJs Wholesale. In addition to that, Kingdee International is 1.94 times more volatile than BJs Wholesale Club. It trades about 0.04 of its total potential returns per unit of risk. BJs Wholesale Club is currently generating about 0.13 per unit of volatility. If you would invest  7,950  in BJs Wholesale Club on October 22, 2024 and sell it today you would earn a total of  1,200  from holding BJs Wholesale Club or generate 15.09% return on investment over 90 days.

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

Kingdee International Software  vs.  BJs Wholesale Club

Kingdee International

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kingdee International Software are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, Kingdee International may actually be approaching a critical reversion point that can send shares even higher in February 2025.

BJs Wholesale Club

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BJs Wholesale Club are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, BJs Wholesale reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kingdee International and BJs Wholesale

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

The idea behind Kingdee International Software and BJs Wholesale Club 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.