Correlation Between Kingdee International and AB Volvo
Can any of the company-specific risk be diversified away by investing in both Kingdee International and AB Volvo 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 AB Volvo 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 AB Volvo, you can compare the effects of market volatilities on Kingdee International and AB Volvo 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 AB Volvo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kingdee International and AB Volvo.
Diversification Opportunities for Kingdee International and AB Volvo
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kingdee and VOL3 is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Kingdee International Software and AB Volvo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB Volvo 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 AB Volvo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB Volvo has no effect on the direction of Kingdee International i.e., Kingdee International and AB Volvo go up and down completely randomly.
Pair Corralation between Kingdee International and AB Volvo
Assuming the 90 days trading horizon Kingdee International Software is expected to generate 2.86 times more return on investment than AB Volvo. However, Kingdee International is 2.86 times more volatile than AB Volvo. It trades about 0.13 of its potential returns per unit of risk. AB Volvo is currently generating about 0.11 per unit of risk. If you would invest 67.00 in Kingdee International Software on November 3, 2024 and sell it today you would earn a total of 58.00 from holding Kingdee International Software or generate 86.57% 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. AB Volvo
Performance |
| Timeline |
| Kingdee International |
| AB Volvo |
Kingdee International and AB Volvo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kingdee International and AB Volvo
The main advantage of trading using opposite Kingdee International and AB Volvo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kingdee International position performs unexpectedly, AB Volvo 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 AB Volvo will offset losses from the drop in AB Volvo's long position.| Kingdee International vs. AIR LIQUIDE ADR | Kingdee International vs. RYANAIR HLDGS ADR | Kingdee International vs. SOLSTAD OFFSHORE NK | Kingdee International vs. SOGECLAIR SA INH |
| AB Volvo vs. Zijin Mining Group | AB Volvo vs. American Airlines Group | AB Volvo vs. International Consolidated Airlines | AB Volvo vs. GRIFFIN MINING LTD |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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