Correlation Between Kingdee International and REVO INSURANCE
Can any of the company-specific risk be diversified away by investing in both Kingdee International and REVO INSURANCE 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 REVO INSURANCE 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 REVO INSURANCE SPA, you can compare the effects of market volatilities on Kingdee International and REVO INSURANCE 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 REVO INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kingdee International and REVO INSURANCE.
Diversification Opportunities for Kingdee International and REVO INSURANCE
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Kingdee and REVO is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Kingdee International Software and REVO INSURANCE SPA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REVO INSURANCE SPA 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 REVO INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REVO INSURANCE SPA has no effect on the direction of Kingdee International i.e., Kingdee International and REVO INSURANCE go up and down completely randomly.
Pair Corralation between Kingdee International and REVO INSURANCE
Assuming the 90 days trading horizon Kingdee International Software is expected to generate 0.7 times more return on investment than REVO INSURANCE. However, Kingdee International Software is 1.42 times less risky than REVO INSURANCE. It trades about -0.01 of its potential returns per unit of risk. REVO INSURANCE SPA is currently generating about -0.03 per unit of risk. If you would invest 110.00 in Kingdee International Software on October 23, 2024 and sell it today you would lose (1.00) from holding Kingdee International Software or give up 0.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kingdee International Software vs. REVO INSURANCE SPA
Performance |
| Timeline |
| Kingdee International |
| REVO INSURANCE SPA |
Kingdee International and REVO INSURANCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kingdee International and REVO INSURANCE
The main advantage of trading using opposite Kingdee International and REVO INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kingdee International position performs unexpectedly, REVO INSURANCE 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 REVO INSURANCE will offset losses from the drop in REVO INSURANCE's long position.| Kingdee International vs. Intuit Inc | Kingdee International vs. Palo Alto Networks | Kingdee International vs. Synopsys | Kingdee International vs. Cadence Design 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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