Correlation Between Kingdee International and Agilent Technologies
Can any of the company-specific risk be diversified away by investing in both Kingdee International and Agilent Technologies 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 Agilent Technologies 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 Agilent Technologies, you can compare the effects of market volatilities on Kingdee International and Agilent Technologies 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 Agilent Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kingdee International and Agilent Technologies.
Diversification Opportunities for Kingdee International and Agilent Technologies
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kingdee and Agilent is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Kingdee International Software and Agilent Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agilent Technologies 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 Agilent Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agilent Technologies has no effect on the direction of Kingdee International i.e., Kingdee International and Agilent Technologies go up and down completely randomly.
Pair Corralation between Kingdee International and Agilent Technologies
Assuming the 90 days trading horizon Kingdee International Software is expected to under-perform the Agilent Technologies. In addition to that, Kingdee International is 2.77 times more volatile than Agilent Technologies. It trades about -0.5 of its total potential returns per unit of risk. Agilent Technologies is currently generating about -0.25 per unit of volatility. If you would invest 13,518 in Agilent Technologies on October 11, 2024 and sell it today you would lose (442.00) from holding Agilent Technologies or give up 3.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kingdee International Software vs. Agilent Technologies
Performance |
| Timeline |
| Kingdee International |
| Agilent Technologies |
Kingdee International and Agilent Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kingdee International and Agilent Technologies
The main advantage of trading using opposite Kingdee International and Agilent Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kingdee International position performs unexpectedly, Agilent Technologies 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 Agilent Technologies will offset losses from the drop in Agilent Technologies' long position.| Kingdee International vs. GLOBUS MEDICAL A | Kingdee International vs. Inspire Medical Systems | Kingdee International vs. Sun Life Financial | Kingdee International vs. Merit Medical Systems |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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