Correlation Between Estee Lauder and Kingdee International
Can any of the company-specific risk be diversified away by investing in both Estee Lauder 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 Estee Lauder and Kingdee International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Estee Lauder Companies and Kingdee International Software, you can compare the effects of market volatilities on Estee Lauder 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 Estee Lauder with a short position of Kingdee International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Estee Lauder and Kingdee International.
Diversification Opportunities for Estee Lauder and Kingdee International
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Estee and Kingdee is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Estee Lauder Companies and Kingdee International Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingdee International and Estee Lauder 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 Estee Lauder Companies 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 Estee Lauder i.e., Estee Lauder and Kingdee International go up and down completely randomly.
Pair Corralation between Estee Lauder and Kingdee International
Allowing for the 90-day total investment horizon Estee Lauder Companies is expected to generate 2.0 times more return on investment than Kingdee International. However, Estee Lauder is 2.0 times more volatile than Kingdee International Software. It trades about 0.22 of its potential returns per unit of risk. Kingdee International Software is currently generating about -0.16 per unit of risk. If you would invest 7,212 in Estee Lauder Companies on October 30, 2024 and sell it today you would earn a total of 1,144 from holding Estee Lauder Companies or generate 15.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 92.68% |
| Values | Daily Returns |
Estee Lauder Companies vs. Kingdee International Software
Performance |
| Timeline |
| Estee Lauder Companies |
| Kingdee International |
Estee Lauder and Kingdee International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Estee Lauder and Kingdee International
The main advantage of trading using opposite Estee Lauder and Kingdee International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Estee Lauder 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.| Estee Lauder vs. Honest Company | Estee Lauder vs. Hims Hers Health | Estee Lauder vs. Procter Gamble | Estee Lauder vs. Coty Inc |
| Kingdee International vs. Shake Shack | Kingdee International vs. Kaiser Aluminum | Kingdee International vs. First Watch Restaurant | Kingdee International vs. McDonalds |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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