Correlation Between Chengdu PUTIAN and Kingdee International
Can any of the company-specific risk be diversified away by investing in both Chengdu PUTIAN 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 Chengdu PUTIAN and Kingdee International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chengdu PUTIAN Telecommunications and Kingdee International Software, you can compare the effects of market volatilities on Chengdu PUTIAN 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 Chengdu PUTIAN with a short position of Kingdee International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chengdu PUTIAN and Kingdee International.
Diversification Opportunities for Chengdu PUTIAN and Kingdee International
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Chengdu and Kingdee is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Chengdu PUTIAN Telecommunicati and Kingdee International Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingdee International and Chengdu PUTIAN 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 Chengdu PUTIAN Telecommunications 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 Chengdu PUTIAN i.e., Chengdu PUTIAN and Kingdee International go up and down completely randomly.
Pair Corralation between Chengdu PUTIAN and Kingdee International
Assuming the 90 days trading horizon Chengdu PUTIAN Telecommunications is expected to generate 2.12 times more return on investment than Kingdee International. However, Chengdu PUTIAN is 2.12 times more volatile than Kingdee International Software. It trades about 0.05 of its potential returns per unit of risk. Kingdee International Software is currently generating about 0.05 per unit of risk. If you would invest 6.45 in Chengdu PUTIAN Telecommunications on November 7, 2024 and sell it today you would earn a total of 1.40 from holding Chengdu PUTIAN Telecommunications or generate 21.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chengdu PUTIAN Telecommunicati vs. Kingdee International Software
Performance |
| Timeline |
| Chengdu PUTIAN Telec |
| Kingdee International |
Chengdu PUTIAN and Kingdee International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chengdu PUTIAN and Kingdee International
The main advantage of trading using opposite Chengdu PUTIAN and Kingdee International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chengdu PUTIAN 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.| Chengdu PUTIAN vs. UPDATE SOFTWARE | Chengdu PUTIAN vs. Yanzhou Coal Mining | Chengdu PUTIAN vs. ASURE SOFTWARE | Chengdu PUTIAN vs. Align Technology |
| Kingdee International vs. CREDIT AGRICOLE | Kingdee International vs. SALESFORCE INC CDR | Kingdee International vs. REVO INSURANCE SPA | Kingdee International vs. UNICREDIT SPA ADR |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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