Correlation Between Microsoft and Huadong Medicine
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By analyzing existing cross correlation between Microsoft and Huadong Medicine Co, you can compare the effects of market volatilities on Microsoft and Huadong Medicine 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 Microsoft with a short position of Huadong Medicine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Huadong Medicine.
Diversification Opportunities for Microsoft and Huadong Medicine
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Microsoft and Huadong is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Huadong Medicine Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huadong Medicine and Microsoft 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 Microsoft are associated (or correlated) with Huadong Medicine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huadong Medicine has no effect on the direction of Microsoft i.e., Microsoft and Huadong Medicine go up and down completely randomly.
Pair Corralation between Microsoft and Huadong Medicine
Given the investment horizon of 90 days Microsoft is expected to generate 1.19 times less return on investment than Huadong Medicine. But when comparing it to its historical volatility, Microsoft is 1.79 times less risky than Huadong Medicine. It trades about 0.11 of its potential returns per unit of risk. Huadong Medicine Co is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 3,497 in Huadong Medicine Co on September 27, 2024 and sell it today you would earn a total of 106.00 from holding Huadong Medicine Co or generate 3.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Microsoft vs. Huadong Medicine Co
Performance |
| Timeline |
| Microsoft |
| Huadong Medicine |
Microsoft and Huadong Medicine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Huadong Medicine
The main advantage of trading using opposite Microsoft and Huadong Medicine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Huadong Medicine 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 Huadong Medicine will offset losses from the drop in Huadong Medicine's long position.| Microsoft vs. BlackBerry | Microsoft vs. Global Blue Group | Microsoft vs. Aurora Mobile | Microsoft vs. Marqeta |
| Huadong Medicine vs. Industrial and Commercial | Huadong Medicine vs. Kweichow Moutai Co | Huadong Medicine vs. Agricultural Bank of | Huadong Medicine vs. China Mobile Limited |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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