Correlation Between Kingdee International and FORWARD AIR

Can any of the company-specific risk be diversified away by investing in both Kingdee International and FORWARD AIR 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 Kingdee International and FORWARD AIR into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kingdee International Software and FORWARD AIR P, you can compare the effects of market volatilities on Kingdee International and FORWARD AIR 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 Kingdee International with a short position of FORWARD AIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kingdee International and FORWARD AIR.

Diversification Opportunities for Kingdee International and FORWARD AIR

0.84

Correlation Coefficient

Kingdee International  FORWARD AIR

Very poor diversification

The 3 months correlation between Kingdee and FORWARD is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Kingdee International Software and FORWARD AIR P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FORWARD AIR P and Kingdee International 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 Kingdee International Software are associated (or correlated) with FORWARD AIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FORWARD AIR P has no effect on the direction of Kingdee International i.e., Kingdee International and FORWARD AIR go up and down completely randomly.

Pair Corralation between Kingdee International and FORWARD AIR

Assuming the 90 days trading horizon Kingdee International is expected to generate 2.48 times less return on investment than FORWARD AIR. But when comparing it to its historical volatility, Kingdee International Software is 1.39 times less risky than FORWARD AIR. It trades about 0.13 of its potential returns per unit of risk. FORWARD AIR P is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  1,250  in FORWARD AIR P on April 22, 2025 and sell it today you would earn a total of  1,065  from holding FORWARD AIR P or generate 85.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Kingdee International Software  vs.  FORWARD AIR P

Kingdee International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kingdee International Software are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain forward indicators, Kingdee International reported solid returns over the last few months and may actually be approaching a breakup point.

FORWARD AIR P

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FORWARD AIR P are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, FORWARD AIR reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kingdee International and FORWARD AIR

The main advantage of trading using opposite Kingdee International and FORWARD AIR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kingdee International position performs unexpectedly, FORWARD AIR 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 FORWARD AIR will offset losses from the drop in FORWARD AIR's long position.

The idea behind Kingdee International Software and FORWARD AIR P 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.

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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.