Correlation Between American Eagle and Kingdee International
Can any of the company-specific risk be diversified away by investing in both American Eagle 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 American Eagle and Kingdee International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Eagle Outfitters and Kingdee International Software, you can compare the effects of market volatilities on American Eagle 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 American Eagle with a short position of Kingdee International. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Eagle and Kingdee International.
Diversification Opportunities for American Eagle and Kingdee International
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Kingdee is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding American Eagle Outfitters and Kingdee International Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingdee International and American Eagle 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 American Eagle Outfitters 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 American Eagle i.e., American Eagle and Kingdee International go up and down completely randomly.
Pair Corralation between American Eagle and Kingdee International
Assuming the 90 days trading horizon American Eagle Outfitters is expected to under-perform the Kingdee International. In addition to that, American Eagle is 1.0 times more volatile than Kingdee International Software. It trades about -0.05 of its total potential returns per unit of risk. Kingdee International Software is currently generating about 0.08 per unit of volatility. If you would invest 102.00 in Kingdee International Software on October 25, 2024 and sell it today you would earn a total of 9.00 from holding Kingdee International Software or generate 8.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Eagle Outfitters vs. Kingdee International Software
Performance |
| Timeline |
| American Eagle Outfitters |
| Kingdee International |
American Eagle and Kingdee International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Eagle and Kingdee International
The main advantage of trading using opposite American Eagle and Kingdee International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Eagle 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.| American Eagle vs. Highlight Communications AG | American Eagle vs. Geely Automobile Holdings | American Eagle vs. Iridium Communications | American Eagle vs. VULCAN MATERIALS |
| Kingdee International vs. American Eagle Outfitters | Kingdee International vs. GEAR4MUSIC LS 10 | Kingdee International vs. NTG Nordic Transport | Kingdee International vs. Warner Music Group |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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