Correlation Between LION ONE and KINGDEE INTL
Can any of the company-specific risk be diversified away by investing in both LION ONE and KINGDEE INTL 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 LION ONE and KINGDEE INTL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LION ONE METALS and KINGDEE INTL SOFTWA, you can compare the effects of market volatilities on LION ONE and KINGDEE INTL 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 LION ONE with a short position of KINGDEE INTL. Check out your portfolio center. Please also check ongoing floating volatility patterns of LION ONE and KINGDEE INTL.
Diversification Opportunities for LION ONE and KINGDEE INTL
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between LION and KINGDEE is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding LION ONE METALS and KINGDEE INTL SOFTWA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KINGDEE INTL SOFTWA and LION ONE 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 LION ONE METALS are associated (or correlated) with KINGDEE INTL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KINGDEE INTL SOFTWA has no effect on the direction of LION ONE i.e., LION ONE and KINGDEE INTL go up and down completely randomly.
Pair Corralation between LION ONE and KINGDEE INTL
Assuming the 90 days trading horizon LION ONE METALS is expected to under-perform the KINGDEE INTL. In addition to that, LION ONE is 1.18 times more volatile than KINGDEE INTL SOFTWA. It trades about -0.08 of its total potential returns per unit of risk. KINGDEE INTL SOFTWA is currently generating about 0.0 per unit of volatility. If you would invest 132.00 in KINGDEE INTL SOFTWA on September 4, 2024 and sell it today you would lose (27.00) from holding KINGDEE INTL SOFTWA or give up 20.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
LION ONE METALS vs. KINGDEE INTL SOFTWA
Performance |
| Timeline |
| LION ONE METALS |
| KINGDEE INTL SOFTWA |
LION ONE and KINGDEE INTL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LION ONE and KINGDEE INTL
The main advantage of trading using opposite LION ONE and KINGDEE INTL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LION ONE position performs unexpectedly, KINGDEE INTL 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 KINGDEE INTL will offset losses from the drop in KINGDEE INTL's long position.The idea behind LION ONE METALS and KINGDEE INTL SOFTWA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| KINGDEE INTL vs. VIRGIN WINES UK | KINGDEE INTL vs. VIVA WINE GROUP | KINGDEE INTL vs. CENTURIA OFFICE REIT | KINGDEE INTL vs. WillScot Mobile Mini |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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