Correlation Between Kingdee International and Trip Group
Can any of the company-specific risk be diversified away by investing in both Kingdee International and Trip Group 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 Trip Group 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 Trip Group Limited, you can compare the effects of market volatilities on Kingdee International and Trip Group 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 Trip Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kingdee International and Trip Group.
Diversification Opportunities for Kingdee International and Trip Group
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kingdee and Trip is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Kingdee International Software and Trip Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trip Group Limited 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 Trip Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trip Group Limited has no effect on the direction of Kingdee International i.e., Kingdee International and Trip Group go up and down completely randomly.
Pair Corralation between Kingdee International and Trip Group
Assuming the 90 days trading horizon Kingdee International Software is expected to generate 1.31 times more return on investment than Trip Group. However, Kingdee International is 1.31 times more volatile than Trip Group Limited. It trades about 0.07 of its potential returns per unit of risk. Trip Group Limited is currently generating about 0.07 per unit of risk. If you would invest 98.00 in Kingdee International Software on October 26, 2024 and sell it today you would earn a total of 12.00 from holding Kingdee International Software or generate 12.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kingdee International Software vs. Trip Group Limited
Performance |
| Timeline |
| Kingdee International |
| Trip Group Limited |
Kingdee International and Trip Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kingdee International and Trip Group
The main advantage of trading using opposite Kingdee International and Trip Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kingdee International position performs unexpectedly, Trip Group 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 Trip Group will offset losses from the drop in Trip Group's long position.| Kingdee International vs. FUYO GENERAL LEASE | Kingdee International vs. Nucletron Electronic Aktiengesellschaft | Kingdee International vs. WILLIS LEASE FIN | Kingdee International vs. United Rentals |
| Trip Group vs. Kingdee International Software | Trip Group vs. Agilent Technologies | Trip Group vs. Playtech plc | Trip Group vs. VELA TECHNOLPLC LS 0001 |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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