Correlation Between Kingdee International and TreeHouse Foods
Can any of the company-specific risk be diversified away by investing in both Kingdee International and TreeHouse Foods 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 TreeHouse Foods 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 TreeHouse Foods, you can compare the effects of market volatilities on Kingdee International and TreeHouse Foods 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 TreeHouse Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kingdee International and TreeHouse Foods.
Diversification Opportunities for Kingdee International and TreeHouse Foods
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Kingdee and TreeHouse is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Kingdee International Software and TreeHouse Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TreeHouse Foods 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 TreeHouse Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TreeHouse Foods has no effect on the direction of Kingdee International i.e., Kingdee International and TreeHouse Foods go up and down completely randomly.
Pair Corralation between Kingdee International and TreeHouse Foods
Assuming the 90 days trading horizon Kingdee International Software is expected to generate 1.4 times more return on investment than TreeHouse Foods. However, Kingdee International is 1.4 times more volatile than TreeHouse Foods. It trades about 0.42 of its potential returns per unit of risk. TreeHouse Foods is currently generating about -0.05 per unit of risk. If you would invest 98.00 in Kingdee International Software on November 4, 2024 and sell it today you would earn a total of 27.00 from holding Kingdee International Software or generate 27.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Kingdee International Software vs. TreeHouse Foods
Performance |
| Timeline |
| Kingdee International |
| TreeHouse Foods |
Kingdee International and TreeHouse Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kingdee International and TreeHouse Foods
The main advantage of trading using opposite Kingdee International and TreeHouse Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kingdee International position performs unexpectedly, TreeHouse Foods 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 TreeHouse Foods will offset losses from the drop in TreeHouse Foods' long position.| Kingdee International vs. Mitsubishi Gas Chemical | Kingdee International vs. Eastman Chemical | Kingdee International vs. WisdomTree Investments | Kingdee International vs. Mitsui Chemicals |
| TreeHouse Foods vs. Air Transport Services | TreeHouse Foods vs. Jacquet Metal Service | TreeHouse Foods vs. National Retail Properties | TreeHouse Foods vs. SIDETRADE EO 1 |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |