Correlation Between Kingdee International and Australian Agricultural
Can any of the company-specific risk be diversified away by investing in both Kingdee International and Australian Agricultural 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 Australian Agricultural 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 Australian Agricultural, you can compare the effects of market volatilities on Kingdee International and Australian Agricultural 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 Australian Agricultural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kingdee International and Australian Agricultural.
Diversification Opportunities for Kingdee International and Australian Agricultural
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Kingdee and Australian is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Kingdee International Software and Australian Agricultural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Agricultural 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 Australian Agricultural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Agricultural has no effect on the direction of Kingdee International i.e., Kingdee International and Australian Agricultural go up and down completely randomly.
Pair Corralation between Kingdee International and Australian Agricultural
Assuming the 90 days trading horizon Kingdee International Software is expected to generate 2.01 times more return on investment than Australian Agricultural. However, Kingdee International is 2.01 times more volatile than Australian Agricultural. It trades about 0.4 of its potential returns per unit of risk. Australian Agricultural is currently generating about 0.05 per unit of risk. If you would invest 99.00 in Kingdee International Software on November 3, 2024 and sell it today you would earn a total of 26.00 from holding Kingdee International Software or generate 26.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kingdee International Software vs. Australian Agricultural
Performance |
| Timeline |
| Kingdee International |
| Australian Agricultural |
Kingdee International and Australian Agricultural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kingdee International and Australian Agricultural
The main advantage of trading using opposite Kingdee International and Australian Agricultural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kingdee International position performs unexpectedly, Australian Agricultural 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 Australian Agricultural will offset losses from the drop in Australian Agricultural's long position.| Kingdee International vs. Intuit Inc | Kingdee International vs. Palo Alto Networks | Kingdee International vs. Synopsys | Kingdee International vs. Cadence Design Systems |
| Australian Agricultural vs. Nippon Steel | Australian Agricultural vs. Khiron Life Sciences | Australian Agricultural vs. MAGNUM MINING EXP | Australian Agricultural vs. United States Steel |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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