Correlation Between Kingdee International and AGF Management

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

Diversification Opportunities for Kingdee International and AGF Management

0.15

Correlation Coefficient

Kingdee International  AGF Management

Average diversification

The 3 months correlation between Kingdee and AGF is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Kingdee International Software and AGF Management Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGF Management 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 AGF Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGF Management has no effect on the direction of Kingdee International i.e., Kingdee International and AGF Management go up and down completely randomly.

Pair Corralation between Kingdee International and AGF Management

Assuming the 90 days trading horizon Kingdee International Software is expected to under-perform the AGF Management. In addition to that, Kingdee International is 2.06 times more volatile than AGF Management Limited. It trades about -0.57 of its total potential returns per unit of risk. AGF Management Limited is currently generating about -0.13 per unit of volatility. If you would invest  730.00  in AGF Management Limited on October 10, 2024 and sell it today you would lose (20.00) from holding AGF Management Limited or give up 2.74% of portfolio value over 90 days.

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

Kingdee International Software  vs.  AGF Management Limited

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.

AGF Management

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AGF Management Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AGF Management may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Kingdee International and AGF Management

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

The idea behind Kingdee International Software and AGF Management Limited 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.