Correlation Between Kingdee International and UPDATE SOFTWARE

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

Diversification Opportunities for Kingdee International and UPDATE SOFTWARE

0.16

Correlation Coefficient

Kingdee International  UPDATE SOFTWARE

Average diversification

The 3 months correlation between Kingdee and UPDATE is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Kingdee International Software and UPDATE SOFTWARE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UPDATE SOFTWARE 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 UPDATE SOFTWARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UPDATE SOFTWARE has no effect on the direction of Kingdee International i.e., Kingdee International and UPDATE SOFTWARE go up and down completely randomly.

Pair Corralation between Kingdee International and UPDATE SOFTWARE

Assuming the 90 days trading horizon Kingdee International Software is expected to under-perform the UPDATE SOFTWARE. In addition to that, Kingdee International is 1.02 times more volatile than UPDATE SOFTWARE. It trades about -0.09 of its total potential returns per unit of risk. UPDATE SOFTWARE is currently generating about 0.22 per unit of volatility. If you would invest  949.00  in UPDATE SOFTWARE on October 7, 2024 and sell it today you would earn a total of  615.00  from holding UPDATE SOFTWARE or generate 64.81% return on investment over 90 days.

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

Kingdee International Software  vs.  UPDATE SOFTWARE

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.

UPDATE SOFTWARE

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in UPDATE SOFTWARE are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, UPDATE SOFTWARE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kingdee International and UPDATE SOFTWARE

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

The idea behind Kingdee International Software and UPDATE SOFTWARE 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.