Correlation Between STRAYER EDUCATION and Kingdee International

Can any of the company-specific risk be diversified away by investing in both STRAYER EDUCATION and Kingdee International 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 STRAYER EDUCATION and Kingdee International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between STRAYER EDUCATION and Kingdee International Software, you can compare the effects of market volatilities on STRAYER EDUCATION and Kingdee International 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 STRAYER EDUCATION with a short position of Kingdee International. Check out your portfolio center. Please also check ongoing floating volatility patterns of STRAYER EDUCATION and Kingdee International.

Diversification Opportunities for STRAYER EDUCATION and Kingdee International

0.24

Correlation Coefficient

STRAYER EDUCATION  Kingdee International

Modest diversification

The 3 months correlation between STRAYER and Kingdee is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding STRAYER EDUCATION and Kingdee International Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingdee International and STRAYER EDUCATION 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 STRAYER EDUCATION are associated (or correlated) with Kingdee International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingdee International has no effect on the direction of STRAYER EDUCATION i.e., STRAYER EDUCATION and Kingdee International go up and down completely randomly.

Pair Corralation between STRAYER EDUCATION and Kingdee International

Assuming the 90 days trading horizon STRAYER EDUCATION is expected to generate 0.53 times more return on investment than Kingdee International. However, STRAYER EDUCATION is 1.88 times less risky than Kingdee International. It trades about 0.03 of its potential returns per unit of risk. Kingdee International Software is currently generating about -0.02 per unit of risk. If you would invest  7,459  in STRAYER EDUCATION on October 11, 2024 and sell it today you would earn a total of  1,341  from holding STRAYER EDUCATION or generate 17.98% return on investment over 90 days.

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

STRAYER EDUCATION  vs.  Kingdee International Software

STRAYER EDUCATION

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in STRAYER EDUCATION are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, STRAYER EDUCATION exhibited solid returns over the last few months and may actually be approaching a breakup point.

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

Pair Trading with STRAYER EDUCATION and Kingdee International

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

The idea behind STRAYER EDUCATION and Kingdee International 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.

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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.