Correlation Between Japan Post and KINGDEE INTL
Can any of the company-specific risk be diversified away by investing in both Japan Post and KINGDEE INTL 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 Japan Post and KINGDEE INTL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Japan Post Insurance and KINGDEE INTL SOFTWA, you can compare the effects of market volatilities on Japan Post and KINGDEE INTL 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 Japan Post with a short position of KINGDEE INTL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Post and KINGDEE INTL.
Diversification Opportunities for Japan Post and KINGDEE INTL
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Japan and KINGDEE is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Japan Post Insurance and KINGDEE INTL SOFTWA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KINGDEE INTL SOFTWA and Japan Post 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 Japan Post Insurance are associated (or correlated) with KINGDEE INTL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KINGDEE INTL SOFTWA has no effect on the direction of Japan Post i.e., Japan Post and KINGDEE INTL go up and down completely randomly.
Pair Corralation between Japan Post and KINGDEE INTL
Assuming the 90 days trading horizon Japan Post is expected to generate 1.07 times less return on investment than KINGDEE INTL. But when comparing it to its historical volatility, Japan Post Insurance is 2.03 times less risky than KINGDEE INTL. It trades about 0.34 of its potential returns per unit of risk. KINGDEE INTL SOFTWA is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 106.00 in KINGDEE INTL SOFTWA on September 12, 2024 and sell it today you would earn a total of 20.00 from holding KINGDEE INTL SOFTWA or generate 18.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Japan Post Insurance vs. KINGDEE INTL SOFTWA
Performance |
| Timeline |
| Japan Post Insurance |
| KINGDEE INTL SOFTWA |
Japan Post and KINGDEE INTL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Post and KINGDEE INTL
The main advantage of trading using opposite Japan Post and KINGDEE INTL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Post position performs unexpectedly, KINGDEE INTL 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 INTL will offset losses from the drop in KINGDEE INTL's long position.The idea behind Japan Post Insurance and KINGDEE INTL SOFTWA 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.| KINGDEE INTL vs. SIMS METAL MGT | KINGDEE INTL vs. LION ONE METALS | KINGDEE INTL vs. Japan Post Insurance | KINGDEE INTL vs. Direct Line Insurance |
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.
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