Correlation Between Corporate Office and Kingdee International
Can any of the company-specific risk be diversified away by investing in both Corporate Office 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 Corporate Office and Kingdee International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Corporate Office Properties and Kingdee International Software, you can compare the effects of market volatilities on Corporate Office 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 Corporate Office with a short position of Kingdee International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Corporate Office and Kingdee International.
Diversification Opportunities for Corporate Office and Kingdee International
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Corporate and Kingdee is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Corporate Office Properties and Kingdee International Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingdee International and Corporate Office 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 Corporate Office Properties 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 Corporate Office i.e., Corporate Office and Kingdee International go up and down completely randomly.
Pair Corralation between Corporate Office and Kingdee International
Assuming the 90 days horizon Corporate Office Properties is expected to under-perform the Kingdee International. But the stock apears to be less risky and, when comparing its historical volatility, Corporate Office Properties is 2.61 times less risky than Kingdee International. The stock trades about -0.16 of its potential returns per unit of risk. The Kingdee International Software is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 105.00 in Kingdee International Software on October 30, 2024 and sell it today you would earn a total of 14.00 from holding Kingdee International Software or generate 13.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Corporate Office Properties vs. Kingdee International Software
Performance |
| Timeline |
| Corporate Office Pro |
| Kingdee International |
Corporate Office and Kingdee International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Corporate Office and Kingdee International
The main advantage of trading using opposite Corporate Office and Kingdee International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Corporate Office 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.| Corporate Office vs. Japan Tobacco | Corporate Office vs. Brockhaus Capital Management | Corporate Office vs. Tyson Foods | Corporate Office vs. TreeHouse Foods |
| Kingdee International vs. AIR PRODCHEMICALS | Kingdee International vs. Yuexiu Transport Infrastructure | Kingdee International vs. Quaker Chemical | Kingdee International vs. PTT Global Chemical |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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