Correlation Between Kingdee International and Norwegian Air
Can any of the company-specific risk be diversified away by investing in both Kingdee International and Norwegian Air 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 Norwegian Air 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 Norwegian Air Shuttle, you can compare the effects of market volatilities on Kingdee International and Norwegian Air 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 Norwegian Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kingdee International and Norwegian Air.
Diversification Opportunities for Kingdee International and Norwegian Air
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Kingdee and Norwegian is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Kingdee International Software and Norwegian Air Shuttle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norwegian Air Shuttle 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 Norwegian Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norwegian Air Shuttle has no effect on the direction of Kingdee International i.e., Kingdee International and Norwegian Air go up and down completely randomly.
Pair Corralation between Kingdee International and Norwegian Air
Assuming the 90 days trading horizon Kingdee International Software is expected to generate 1.3 times more return on investment than Norwegian Air. However, Kingdee International is 1.3 times more volatile than Norwegian Air Shuttle. It trades about -0.01 of its potential returns per unit of risk. Norwegian Air Shuttle is currently generating about -0.03 per unit of risk. If you would invest 113.00 in Kingdee International Software on October 22, 2024 and sell it today you would lose (4.00) from holding Kingdee International Software or give up 3.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.44% |
| Values | Daily Returns |
Kingdee International Software vs. Norwegian Air Shuttle
Performance |
| Timeline |
| Kingdee International |
| Norwegian Air Shuttle |
Kingdee International and Norwegian Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kingdee International and Norwegian Air
The main advantage of trading using opposite Kingdee International and Norwegian Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kingdee International position performs unexpectedly, Norwegian Air 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 Norwegian Air will offset losses from the drop in Norwegian Air's long position.| Kingdee International vs. United Natural Foods | Kingdee International vs. Lifeway Foods | Kingdee International vs. Gaming and Leisure | Kingdee International vs. HOCHSCHILD MINING |
| Norwegian Air vs. Kingdee International Software | Norwegian Air vs. Easy Software AG | Norwegian Air vs. Townsquare Media | Norwegian Air vs. Alfa Financial 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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