Correlation Between Kingdee International and CARSALES
Can any of the company-specific risk be diversified away by investing in both Kingdee International and CARSALES 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 CARSALES 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 CARSALESCOM, you can compare the effects of market volatilities on Kingdee International and CARSALES 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 CARSALES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kingdee International and CARSALES.
Diversification Opportunities for Kingdee International and CARSALES
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Kingdee and CARSALES is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Kingdee International Software and CARSALESCOM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CARSALESCOM 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 CARSALES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CARSALESCOM has no effect on the direction of Kingdee International i.e., Kingdee International and CARSALES go up and down completely randomly.
Pair Corralation between Kingdee International and CARSALES
Assuming the 90 days trading horizon Kingdee International Software is expected to generate 1.63 times more return on investment than CARSALES. However, Kingdee International is 1.63 times more volatile than CARSALESCOM. It trades about 0.42 of its potential returns per unit of risk. CARSALESCOM is currently generating about 0.29 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 Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kingdee International Software vs. CARSALESCOM
Performance |
| Timeline |
| Kingdee International |
| CARSALESCOM |
Kingdee International and CARSALES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kingdee International and CARSALES
The main advantage of trading using opposite Kingdee International and CARSALES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kingdee International position performs unexpectedly, CARSALES 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 CARSALES will offset losses from the drop in CARSALES's long position.| Kingdee International vs. Intuit Inc | Kingdee International vs. Palo Alto Networks | Kingdee International vs. Synopsys | Kingdee International vs. Cadence Design Systems |
| CARSALES vs. Fast Retailing Co | CARSALES vs. FAST RETAIL ADR | CARSALES vs. SIDETRADE EO 1 | CARSALES vs. TRADEDOUBLER AB SK |
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 CEOs Directory module to screen CEOs from public companies around the world.
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