Correlation Between Kingdee International and DIeteren Group

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

Diversification Opportunities for Kingdee International and DIeteren Group

0.29

Correlation Coefficient

Kingdee International  DIeteren Group

Modest diversification

The 3 months correlation between Kingdee and DIeteren is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Kingdee International Software and DIeteren Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DIeteren Group SA 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 DIeteren Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DIeteren Group SA has no effect on the direction of Kingdee International i.e., Kingdee International and DIeteren Group go up and down completely randomly.

Pair Corralation between Kingdee International and DIeteren Group

Assuming the 90 days trading horizon Kingdee International is expected to generate 7.96 times less return on investment than DIeteren Group. In addition to that, Kingdee International is 1.17 times more volatile than DIeteren Group SA. It trades about 0.02 of its total potential returns per unit of risk. DIeteren Group SA is currently generating about 0.18 per unit of volatility. If you would invest  12,791  in DIeteren Group SA on October 6, 2024 and sell it today you would earn a total of  3,349  from holding DIeteren Group SA or generate 26.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.5%
Values	Daily Returns

Kingdee International Software  vs.  DIeteren Group SA

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 fragile 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.

DIeteren Group SA

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DIeteren Group SA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain fundamental indicators, DIeteren Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kingdee International and DIeteren Group

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

The idea behind Kingdee International Software and DIeteren Group SA 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.

Check out your portfolio center.

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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.