Correlation Between Kingdee International and Aedas Homes
Can any of the company-specific risk be diversified away by investing in both Kingdee International and Aedas Homes 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 Aedas Homes 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 Aedas Homes SA, you can compare the effects of market volatilities on Kingdee International and Aedas Homes 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 Aedas Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kingdee International and Aedas Homes.
Diversification Opportunities for Kingdee International and Aedas Homes
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Kingdee and Aedas is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Kingdee International Software and Aedas Homes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aedas Homes SA 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 Aedas Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aedas Homes SA has no effect on the direction of Kingdee International i.e., Kingdee International and Aedas Homes go up and down completely randomly.
Pair Corralation between Kingdee International and Aedas Homes
Assuming the 90 days trading horizon Kingdee International Software is expected to generate 1.86 times more return on investment than Aedas Homes. However, Kingdee International is 1.86 times more volatile than Aedas Homes SA. It trades about 0.15 of its potential returns per unit of risk. Aedas Homes SA is currently generating about 0.12 per unit of risk. If you would invest 93.00 in Kingdee International Software on November 2, 2024 and sell it today you would earn a total of 32.00 from holding Kingdee International Software or generate 34.41% 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. Aedas Homes SA
Performance |
| Timeline |
| Kingdee International |
| Aedas Homes SA |
Kingdee International and Aedas Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kingdee International and Aedas Homes
The main advantage of trading using opposite Kingdee International and Aedas Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kingdee International position performs unexpectedly, Aedas Homes 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 Aedas Homes will offset losses from the drop in Aedas Homes' long position.| Kingdee International vs. AIR LIQUIDE ADR | Kingdee International vs. RYANAIR HLDGS ADR | Kingdee International vs. SOLSTAD OFFSHORE NK | Kingdee International vs. SOGECLAIR SA INH |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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