Correlation Between TreeHouse Foods and Kingdee International
Can any of the company-specific risk be diversified away by investing in both TreeHouse Foods and Kingdee International 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 TreeHouse Foods and Kingdee International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TreeHouse Foods and Kingdee International Software, you can compare the effects of market volatilities on TreeHouse Foods and Kingdee International 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 TreeHouse Foods with a short position of Kingdee International. Check out your portfolio center. Please also check ongoing floating volatility patterns of TreeHouse Foods and Kingdee International.
Diversification Opportunities for TreeHouse Foods and Kingdee International
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between TreeHouse and Kingdee is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding TreeHouse Foods and Kingdee International Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingdee International and TreeHouse Foods 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 TreeHouse Foods are associated (or correlated) with Kingdee International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingdee International has no effect on the direction of TreeHouse Foods i.e., TreeHouse Foods and Kingdee International go up and down completely randomly.
Pair Corralation between TreeHouse Foods and Kingdee International
Assuming the 90 days horizon TreeHouse Foods is expected to under-perform the Kingdee International. But the stock apears to be less risky and, when comparing its historical volatility, TreeHouse Foods is 1.4 times less risky than Kingdee International. The stock trades about -0.05 of its potential returns per unit of risk. The Kingdee International Software is currently generating about 0.42 of returns per unit of risk over similar time horizon. 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 |
TreeHouse Foods vs. Kingdee International Software
Performance |
| Timeline |
| TreeHouse Foods |
| Kingdee International |
TreeHouse Foods and Kingdee International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TreeHouse Foods and Kingdee International
The main advantage of trading using opposite TreeHouse Foods and Kingdee International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TreeHouse Foods position performs unexpectedly, Kingdee International 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 International will offset losses from the drop in Kingdee International's long position.| TreeHouse Foods vs. Air Transport Services | TreeHouse Foods vs. Jacquet Metal Service | TreeHouse Foods vs. National Retail Properties | TreeHouse Foods vs. SIDETRADE EO 1 |
| Kingdee International vs. Mitsubishi Gas Chemical | Kingdee International vs. Eastman Chemical | Kingdee International vs. WisdomTree Investments | Kingdee International vs. Mitsui Chemicals |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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