Correlation Between Kingdee International and Renesas Electronics
Can any of the company-specific risk be diversified away by investing in both Kingdee International and Renesas Electronics 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 Renesas Electronics 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 Renesas Electronics, you can compare the effects of market volatilities on Kingdee International and Renesas Electronics 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 Renesas Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kingdee International and Renesas Electronics.
Diversification Opportunities for Kingdee International and Renesas Electronics
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Kingdee and Renesas is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Kingdee International Software and Renesas Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renesas Electronics 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 Renesas Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renesas Electronics has no effect on the direction of Kingdee International i.e., Kingdee International and Renesas Electronics go up and down completely randomly.
Pair Corralation between Kingdee International and Renesas Electronics
Assuming the 90 days trading horizon Kingdee International Software is expected to generate 1.24 times more return on investment than Renesas Electronics. However, Kingdee International is 1.24 times more volatile than Renesas Electronics. It trades about 0.07 of its potential returns per unit of risk. Renesas Electronics is currently generating about 0.04 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 | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kingdee International Software vs. Renesas Electronics
Performance |
| Timeline |
| Kingdee International |
| Renesas Electronics |
Kingdee International and Renesas Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kingdee International and Renesas Electronics
The main advantage of trading using opposite Kingdee International and Renesas Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kingdee International position performs unexpectedly, Renesas Electronics 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 Renesas Electronics will offset losses from the drop in Renesas Electronics' 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 |
| Renesas Electronics vs. VITEC SOFTWARE GROUP | Renesas Electronics vs. TOMBADOR IRON LTD | Renesas Electronics vs. GBS Software AG | Renesas Electronics vs. Kingdee International Software |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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