Correlation Between China Information and Microsoft
Can any of the company-specific risk be diversified away by investing in both China Information and Microsoft 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 China Information and Microsoft into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Information Technology and Microsoft, you can compare the effects of market volatilities on China Information and Microsoft 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 China Information with a short position of Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Information and Microsoft.
Diversification Opportunities for China Information and Microsoft
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between China and Microsoft is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding China Information Technology and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft and China Information 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 China Information Technology are associated (or correlated) with Microsoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft has no effect on the direction of China Information i.e., China Information and Microsoft go up and down completely randomly.
Pair Corralation between China Information and Microsoft
If you would invest (100.00) in China Information Technology on January 19, 2024 and sell it today you would earn a total of 100.00 from holding China Information Technology or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
China Information Technology vs. Microsoft
Performance |
| Timeline |
| China Information |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Microsoft |
China Information and Microsoft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Information and Microsoft
The main advantage of trading using opposite China Information and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Information position performs unexpectedly, Microsoft 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 Microsoft will offset losses from the drop in Microsoft's long position.| China Information vs. Tyson Foods | China Information vs. Hf Foods Group | China Information vs. Robix Environmental Technologies | China Information vs. Albertsons Companies |
| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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