Correlation Between Kingdee International and Nike
Can any of the company-specific risk be diversified away by investing in both Kingdee International and Nike 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 Nike 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 Nike Inc, you can compare the effects of market volatilities on Kingdee International and Nike 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 Nike. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kingdee International and Nike.
Diversification Opportunities for Kingdee International and Nike
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kingdee and Nike is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Kingdee International Software and Nike Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nike Inc 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 Nike. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nike Inc has no effect on the direction of Kingdee International i.e., Kingdee International and Nike go up and down completely randomly.
Pair Corralation between Kingdee International and Nike
Assuming the 90 days trading horizon Kingdee International Software is expected to generate 2.9 times more return on investment than Nike. However, Kingdee International is 2.9 times more volatile than Nike Inc. It trades about 0.11 of its potential returns per unit of risk. Nike Inc is currently generating about 0.04 per unit of risk. If you would invest 69.00 in Kingdee International Software on October 25, 2024 and sell it today you would earn a total of 42.00 from holding Kingdee International Software or generate 60.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kingdee International Software vs. Nike Inc
Performance |
| Timeline |
| Kingdee International |
| Nike Inc |
Kingdee International and Nike Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kingdee International and Nike
The main advantage of trading using opposite Kingdee International and Nike positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kingdee International position performs unexpectedly, Nike 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 Nike will offset losses from the drop in Nike's long position.| Kingdee International vs. American Eagle Outfitters | Kingdee International vs. GEAR4MUSIC LS 10 | Kingdee International vs. NTG Nordic Transport | Kingdee International vs. Warner Music Group |
| Nike vs. Entravision Communications | Nike vs. SCOTT TECHNOLOGY | Nike vs. COMPUTERSHARE | Nike vs. Ribbon Communications |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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