Correlation Between Addtech AB and Kingdee International
Can any of the company-specific risk be diversified away by investing in both Addtech AB 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 Addtech AB and Kingdee International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Addtech AB and Kingdee International Software, you can compare the effects of market volatilities on Addtech AB 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 Addtech AB with a short position of Kingdee International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addtech AB and Kingdee International.
Diversification Opportunities for Addtech AB and Kingdee International
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Addtech and Kingdee is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Addtech AB and Kingdee International Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingdee International and Addtech AB 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 Addtech AB 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 Addtech AB i.e., Addtech AB and Kingdee International go up and down completely randomly.
Pair Corralation between Addtech AB and Kingdee International
Assuming the 90 days trading horizon Addtech AB is expected to generate 1.01 times less return on investment than Kingdee International. But when comparing it to its historical volatility, Addtech AB is 1.79 times less risky than Kingdee International. It trades about 0.09 of its potential returns per unit of risk. Kingdee International Software is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 91.00 in Kingdee International Software on November 3, 2024 and sell it today you would earn a total of 34.00 from holding Kingdee International Software or generate 37.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Addtech AB vs. Kingdee International Software
Performance |
| Timeline |
| Addtech AB |
| Kingdee International |
Addtech AB and Kingdee International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Addtech AB and Kingdee International
The main advantage of trading using opposite Addtech AB and Kingdee International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addtech AB 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.| Addtech AB vs. Monster Beverage Corp | Addtech AB vs. Molson Coors Beverage | Addtech AB vs. Shin Etsu Chemical Co | Addtech AB vs. X FAB Silicon Foundries |
| Kingdee International vs. AIR LIQUIDE ADR | Kingdee International vs. RYANAIR HLDGS ADR | Kingdee International vs. SOLSTAD OFFSHORE NK | Kingdee International vs. SOGECLAIR SA INH |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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