Correlation Between Kingdee International and CSL

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

Diversification Opportunities for Kingdee International and CSL

-0.38

Correlation Coefficient

Kingdee International  CSL

Very good diversification

The 3 months correlation between Kingdee and CSL is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Kingdee International Software and CSL LTD SPONADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSL LTD SPONADR 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 CSL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSL LTD SPONADR has no effect on the direction of Kingdee International i.e., Kingdee International and CSL go up and down completely randomly.

Pair Corralation between Kingdee International and CSL

Assuming the 90 days trading horizon Kingdee International Software is expected to generate 2.51 times more return on investment than CSL. However, Kingdee International is 2.51 times more volatile than CSL LTD SPONADR. It trades about 0.08 of its potential returns per unit of risk. CSL LTD SPONADR is currently generating about -0.12 per unit of risk. If you would invest  96.00  in Kingdee International Software on October 24, 2024 and sell it today you would earn a total of  13.00  from holding Kingdee International Software or generate 13.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Kingdee International Software  vs.  CSL LTD SPONADR

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 fragile forward indicators, Kingdee International reported solid returns over the last few months and may actually be approaching a breakup point.

CSL LTD SPONADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CSL LTD SPONADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's forward-looking indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Kingdee International and CSL

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

The idea behind Kingdee International Software and CSL LTD SPONADR 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.