Correlation Between TongFu Microelectronics and Microsoft
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By analyzing existing cross correlation between TongFu Microelectronics Co and Microsoft, you can compare the effects of market volatilities on TongFu Microelectronics 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 TongFu Microelectronics with a short position of Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of TongFu Microelectronics and Microsoft.
Diversification Opportunities for TongFu Microelectronics and Microsoft
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between TongFu and Microsoft is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding TongFu Microelectronics Co and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft and TongFu Microelectronics 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 TongFu Microelectronics Co 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 TongFu Microelectronics i.e., TongFu Microelectronics and Microsoft go up and down completely randomly.
Pair Corralation between TongFu Microelectronics and Microsoft
Assuming the 90 days trading horizon TongFu Microelectronics is expected to generate 1.03 times less return on investment than Microsoft. In addition to that, TongFu Microelectronics is 2.32 times more volatile than Microsoft. It trades about 0.03 of its total potential returns per unit of risk. Microsoft is currently generating about 0.08 per unit of volatility. If you would invest 24,921 in Microsoft on November 9, 2024 and sell it today you would earn a total of 16,661 from holding Microsoft or generate 66.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 96.35% |
| Values | Daily Returns |
TongFu Microelectronics Co vs. Microsoft
Performance |
| Timeline |
| TongFu Microelectronics |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
| Microsoft |
TongFu Microelectronics and Microsoft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TongFu Microelectronics and Microsoft
The main advantage of trading using opposite TongFu Microelectronics and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TongFu Microelectronics 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.The idea behind TongFu Microelectronics Co and Microsoft 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.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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