Correlation Between Kingdee International and Australian Oilseeds

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

Diversification Opportunities for Kingdee International and Australian Oilseeds

0.09

Correlation Coefficient

Kingdee International  Australian Oilseeds

Significant diversification

The 3 months correlation between Kingdee and Australian is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Kingdee International Software and Australian Oilseeds Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Oilseeds 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 Australian Oilseeds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Oilseeds has no effect on the direction of Kingdee International i.e., Kingdee International and Australian Oilseeds go up and down completely randomly.

Pair Corralation between Kingdee International and Australian Oilseeds

Assuming the 90 days horizon Kingdee International Software is expected to generate 1.86 times more return on investment than Australian Oilseeds. However, Kingdee International is 1.86 times more volatile than Australian Oilseeds Holdings. It trades about 0.1 of its potential returns per unit of risk. Australian Oilseeds Holdings is currently generating about 0.08 per unit of risk. If you would invest  117.00  in Kingdee International Software on December 21, 2024 and sell it today you would earn a total of  63.00  from holding Kingdee International Software or generate 53.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	93.75%
Values	Daily Returns

Kingdee International Software  vs.  Australian Oilseeds Holdings

Kingdee International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kingdee International Software are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical and fundamental indicators, Kingdee International reported solid returns over the last few months and may actually be approaching a breakup point.

Australian Oilseeds

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Australian Oilseeds Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Australian Oilseeds unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kingdee International and Australian Oilseeds

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

The idea behind Kingdee International Software and Australian Oilseeds Holdings 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.