Correlation Between Kingdee International and BG Foods

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

Diversification Opportunities for Kingdee International and BG Foods

-0.19

Correlation Coefficient

Kingdee International  BG Foods

Good diversification

The 3 months correlation between Kingdee and DHR is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Kingdee International Software and BG Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BG Foods 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 BG Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BG Foods has no effect on the direction of Kingdee International i.e., Kingdee International and BG Foods go up and down completely randomly.

Pair Corralation between Kingdee International and BG Foods

Assuming the 90 days trading horizon Kingdee International Software is expected to under-perform the BG Foods. In addition to that, Kingdee International is 1.07 times more volatile than BG Foods. It trades about -0.13 of its total potential returns per unit of risk. BG Foods is currently generating about 0.2 per unit of volatility. If you would invest  613.00  in BG Foods on October 6, 2024 and sell it today you would earn a total of  73.00  from holding BG Foods or generate 11.91% 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.  BG Foods

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.

BG Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BG Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, BG Foods is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Kingdee International and BG Foods

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

The idea behind Kingdee International Software and BG Foods 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.