Correlation Between Kingdee International and Preferred Bank
Can any of the company-specific risk be diversified away by investing in both Kingdee International and Preferred Bank 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 Preferred Bank 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 Preferred Bank, you can compare the effects of market volatilities on Kingdee International and Preferred Bank 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 Preferred Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kingdee International and Preferred Bank.
Diversification Opportunities for Kingdee International and Preferred Bank
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Kingdee and Preferred is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Kingdee International Software and Preferred Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Preferred Bank 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 Preferred Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Preferred Bank has no effect on the direction of Kingdee International i.e., Kingdee International and Preferred Bank go up and down completely randomly.
Pair Corralation between Kingdee International and Preferred Bank
Assuming the 90 days trading horizon Kingdee International Software is expected to generate 2.32 times more return on investment than Preferred Bank. However, Kingdee International is 2.32 times more volatile than Preferred Bank. It trades about 0.19 of its potential returns per unit of risk. Preferred Bank is currently generating about -0.03 per unit of risk. If you would invest 107.00 in Kingdee International Software on October 29, 2024 and sell it today you would earn a total of 12.00 from holding Kingdee International Software or generate 11.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kingdee International Software vs. Preferred Bank
Performance |
| Timeline |
| Kingdee International |
| Preferred Bank |
Kingdee International and Preferred Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kingdee International and Preferred Bank
The main advantage of trading using opposite Kingdee International and Preferred Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kingdee International position performs unexpectedly, Preferred Bank 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 Preferred Bank will offset losses from the drop in Preferred Bank's long position.| Kingdee International vs. SOEDER SPORTFISKE AB | Kingdee International vs. Hanison Construction Holdings | Kingdee International vs. AUST AGRICULTURAL | Kingdee International vs. Federal Agricultural Mortgage |
| Preferred Bank vs. POSBO UNSPADRS20YC1 | Preferred Bank vs. Postal Savings Bank | Preferred Bank vs. Truist Financial | Preferred Bank vs. OVERSEA CHINUNSPADR2 |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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