Correlation Between Kingdee International and 05971V2D6

Can any of the company-specific risk be diversified away by investing in both Kingdee International and 05971V2D6 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 05971V2D6 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 BCP 325 30 SEP 31, you can compare the effects of market volatilities on Kingdee International and 05971V2D6 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 05971V2D6. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kingdee International and 05971V2D6.

Diversification Opportunities for Kingdee International and 05971V2D6

0.15

Correlation Coefficient

Kingdee International  05971V2D6

Average diversification

The 3 months correlation between Kingdee and 05971V2D6 is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Kingdee International Software and BCP 325 30 SEP 31 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCP 325 30 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 05971V2D6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCP 325 30 has no effect on the direction of Kingdee International i.e., Kingdee International and 05971V2D6 go up and down completely randomly.

Pair Corralation between Kingdee International and 05971V2D6

Assuming the 90 days horizon Kingdee International Software is expected to under-perform the 05971V2D6. But the pink sheet apears to be less risky and, when comparing its historical volatility, Kingdee International Software is 1.68 times less risky than 05971V2D6. The pink sheet trades about -0.22 of its potential returns per unit of risk. The BCP 325 30 SEP 31 is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  9,500  in BCP 325 30 SEP 31 on October 12, 2024 and sell it today you would lose (100.00) from holding BCP 325 30 SEP 31 or give up 1.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	76.19%
Values	Daily Returns

Kingdee International Software  vs.  BCP 325 30 SEP 31

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 latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

BCP 325 30

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BCP 325 30 SEP 31 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 05971V2D6 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kingdee International and 05971V2D6

The main advantage of trading using opposite Kingdee International and 05971V2D6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kingdee International position performs unexpectedly, 05971V2D6 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 05971V2D6 will offset losses from the drop in 05971V2D6's long position.

The idea behind Kingdee International Software and BCP 325 30 SEP 31 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.