Correlation Between Kingdee International and GALENA MINING

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

Diversification Opportunities for Kingdee International and GALENA MINING

0.0

Correlation Coefficient

Kingdee International  GALENA MINING

Pay attention - limited upside

The 3 months correlation between Kingdee and GALENA is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Kingdee International Software and GALENA MINING LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GALENA MINING LTD 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 GALENA MINING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GALENA MINING LTD has no effect on the direction of Kingdee International i.e., Kingdee International and GALENA MINING go up and down completely randomly.

Pair Corralation between Kingdee International and GALENA MINING

Assuming the 90 days trading horizon Kingdee International Software is expected to generate 0.57 times more return on investment than GALENA MINING. However, Kingdee International Software is 1.75 times less risky than GALENA MINING. It trades about -0.01 of its potential returns per unit of risk. GALENA MINING LTD is currently generating about -0.02 per unit of risk. If you would invest  197.00  in Kingdee International Software on October 3, 2024 and sell it today you would lose (90.00) from holding Kingdee International Software or give up 45.69% of portfolio value over 90 days.

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

Kingdee International Software  vs.  GALENA MINING LTD

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.

GALENA MINING LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GALENA MINING LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, GALENA MINING is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Kingdee International and GALENA MINING

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

The idea behind Kingdee International Software and GALENA MINING LTD 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.