Correlation Between X FAB and Kingdee International
Can any of the company-specific risk be diversified away by investing in both X FAB 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 X FAB and Kingdee International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between X FAB Silicon Foundries and Kingdee International Software, you can compare the effects of market volatilities on X FAB 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 X FAB with a short position of Kingdee International. Check out your portfolio center. Please also check ongoing floating volatility patterns of X FAB and Kingdee International.
Diversification Opportunities for X FAB and Kingdee International
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between XFB and Kingdee is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and Kingdee International Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingdee International and X FAB 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 X FAB Silicon Foundries 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 X FAB i.e., X FAB and Kingdee International go up and down completely randomly.
Pair Corralation between X FAB and Kingdee International
Assuming the 90 days trading horizon X FAB is expected to generate 84.69 times less return on investment than Kingdee International. But when comparing it to its historical volatility, X FAB Silicon Foundries is 1.31 times less risky than Kingdee International. It trades about 0.0 of its potential returns per unit of risk. Kingdee International Software is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 107.00 in Kingdee International Software on October 29, 2024 and sell it today you would earn a total of 12.00 from holding Kingdee International Software or generate 11.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
X FAB Silicon Foundries vs. Kingdee International Software
Performance |
| Timeline |
| X FAB Silicon |
| Kingdee International |
X FAB and Kingdee International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X FAB and Kingdee International
The main advantage of trading using opposite X FAB and Kingdee International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X FAB 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.| X FAB vs. Reinsurance Group of | X FAB vs. GURU ORGANIC ENERGY | X FAB vs. PATTIES FOODS | X FAB vs. Cal Maine 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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