Correlation Between Iridium Communications and KINGDEE INTL
Can any of the company-specific risk be diversified away by investing in both Iridium Communications 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 Iridium Communications and KINGDEE INTL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iridium Communications and KINGDEE INTL SOFTWA, you can compare the effects of market volatilities on Iridium Communications 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 Iridium Communications with a short position of KINGDEE INTL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iridium Communications and KINGDEE INTL.
Diversification Opportunities for Iridium Communications and KINGDEE INTL
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Iridium and KINGDEE is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Iridium Communications 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 Iridium Communications 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 Iridium Communications 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 Iridium Communications i.e., Iridium Communications and KINGDEE INTL go up and down completely randomly.
Pair Corralation between Iridium Communications and KINGDEE INTL
Assuming the 90 days horizon Iridium Communications is expected to under-perform the KINGDEE INTL. But the stock apears to be less risky and, when comparing its historical volatility, Iridium Communications is 1.54 times less risky than KINGDEE INTL. The stock trades about -0.04 of its potential returns per unit of risk. The KINGDEE INTL SOFTWA is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 206.00 in KINGDEE INTL SOFTWA on August 31, 2024 and sell it today you would lose (101.00) from holding KINGDEE INTL SOFTWA or give up 49.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Iridium Communications vs. KINGDEE INTL SOFTWA
Performance |
| Timeline |
| Iridium Communications |
| KINGDEE INTL SOFTWA |
Iridium Communications and KINGDEE INTL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iridium Communications and KINGDEE INTL
The main advantage of trading using opposite Iridium Communications and KINGDEE INTL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iridium Communications 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.| Iridium Communications vs. ATT Inc | Iridium Communications vs. Deutsche Telekom AG | Iridium Communications vs. Superior Plus Corp | Iridium Communications vs. NMI Holdings |
| KINGDEE INTL vs. Hemisphere Energy Corp | KINGDEE INTL vs. SBA Communications Corp | KINGDEE INTL vs. Sporttotal AG | KINGDEE INTL vs. Iridium Communications |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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