Correlation Between Kingdee International and Micron Technology

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

Diversification Opportunities for Kingdee International and Micron Technology

-0.08

Correlation Coefficient

Kingdee International  Micron Technology

Good diversification

The 3 months correlation between Kingdee and Micron is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Kingdee International Software and Micron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micron Technology 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 Micron Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micron Technology has no effect on the direction of Kingdee International i.e., Kingdee International and Micron Technology go up and down completely randomly.

Pair Corralation between Kingdee International and Micron Technology

Assuming the 90 days trading horizon Kingdee International Software is expected to under-perform the Micron Technology. In addition to that, Kingdee International is 1.35 times more volatile than Micron Technology. It trades about -0.01 of its total potential returns per unit of risk. Micron Technology is currently generating about 0.05 per unit of volatility. If you would invest  5,352  in Micron Technology on October 3, 2024 and sell it today you would earn a total of  3,109  from holding Micron Technology or generate 58.09% 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.  Micron Technology

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.

Micron Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Micron Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Micron Technology is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Kingdee International and Micron Technology

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

The idea behind Kingdee International Software and Micron Technology 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.