Correlation Between Hemisphere Energy and KINGDEE INTL
Can any of the company-specific risk be diversified away by investing in both Hemisphere Energy 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 Hemisphere Energy and KINGDEE INTL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hemisphere Energy Corp and KINGDEE INTL SOFTWA, you can compare the effects of market volatilities on Hemisphere Energy 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 Hemisphere Energy with a short position of KINGDEE INTL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hemisphere Energy and KINGDEE INTL.
Diversification Opportunities for Hemisphere Energy and KINGDEE INTL
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hemisphere and KINGDEE is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Hemisphere Energy Corp 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 Hemisphere Energy 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 Hemisphere Energy Corp 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 Hemisphere Energy i.e., Hemisphere Energy and KINGDEE INTL go up and down completely randomly.
Pair Corralation between Hemisphere Energy and KINGDEE INTL
Assuming the 90 days trading horizon Hemisphere Energy Corp is expected to generate 0.47 times more return on investment than KINGDEE INTL. However, Hemisphere Energy Corp is 2.13 times less risky than KINGDEE INTL. It trades about 0.13 of its potential returns per unit of risk. KINGDEE INTL SOFTWA is currently generating about 0.0 per unit of risk. If you would invest 72.00 in Hemisphere Energy Corp on September 2, 2024 and sell it today you would earn a total of 52.00 from holding Hemisphere Energy Corp or generate 72.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.6% |
| Values | Daily Returns |
Hemisphere Energy Corp vs. KINGDEE INTL SOFTWA
Performance |
| Timeline |
| Hemisphere Energy Corp |
| KINGDEE INTL SOFTWA |
Hemisphere Energy and KINGDEE INTL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hemisphere Energy and KINGDEE INTL
The main advantage of trading using opposite Hemisphere Energy and KINGDEE INTL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hemisphere Energy 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.| Hemisphere Energy vs. Apple Inc | Hemisphere Energy vs. Apple Inc | Hemisphere Energy vs. Apple Inc | Hemisphere Energy vs. Apple Inc |
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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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