Correlation Between Kingdee International and IDP EDUCATION
Can any of the company-specific risk be diversified away by investing in both Kingdee International and IDP EDUCATION 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 Kingdee International and IDP EDUCATION into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kingdee International Software and IDP EDUCATION LTD, you can compare the effects of market volatilities on Kingdee International and IDP EDUCATION 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 Kingdee International with a short position of IDP EDUCATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kingdee International and IDP EDUCATION.
Diversification Opportunities for Kingdee International and IDP EDUCATION
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Kingdee and IDP is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Kingdee International Software and IDP EDUCATION LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IDP EDUCATION LTD and Kingdee International 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 Kingdee International Software are associated (or correlated) with IDP EDUCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IDP EDUCATION LTD has no effect on the direction of Kingdee International i.e., Kingdee International and IDP EDUCATION go up and down completely randomly.
Pair Corralation between Kingdee International and IDP EDUCATION
Assuming the 90 days trading horizon Kingdee International Software is expected to under-perform the IDP EDUCATION. But the stock apears to be less risky and, when comparing its historical volatility, Kingdee International Software is 1.84 times less risky than IDP EDUCATION. The stock trades about -0.47 of its potential returns per unit of risk. The IDP EDUCATION LTD is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 715.00 in IDP EDUCATION LTD on October 12, 2024 and sell it today you would earn a total of 25.00 from holding IDP EDUCATION LTD or generate 3.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
Kingdee International Software vs. IDP EDUCATION LTD
Performance |
| Timeline |
| Kingdee International |
| IDP EDUCATION LTD |
Kingdee International and IDP EDUCATION Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kingdee International and IDP EDUCATION
The main advantage of trading using opposite Kingdee International and IDP EDUCATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kingdee International position performs unexpectedly, IDP EDUCATION 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 IDP EDUCATION will offset losses from the drop in IDP EDUCATION's long position.| Kingdee International vs. Apollo Investment Corp | Kingdee International vs. CITY OFFICE REIT | Kingdee International vs. HK Electric Investments | Kingdee International vs. NURAN WIRELESS INC |
| IDP EDUCATION vs. Chengdu PUTIAN Telecommunications | IDP EDUCATION vs. Kingdee International Software | IDP EDUCATION vs. Entravision Communications | IDP EDUCATION vs. Telecom Argentina SA |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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