Correlation Between Microsoft and Wuxi Chemical
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By analyzing existing cross correlation between Microsoft and Wuxi Chemical Equipment, you can compare the effects of market volatilities on Microsoft and Wuxi Chemical 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 Wuxi Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Wuxi Chemical.
Diversification Opportunities for Microsoft and Wuxi Chemical
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Microsoft and Wuxi is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Wuxi Chemical Equipment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wuxi Chemical Equipment 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 Wuxi Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wuxi Chemical Equipment has no effect on the direction of Microsoft i.e., Microsoft and Wuxi Chemical go up and down completely randomly.
Pair Corralation between Microsoft and Wuxi Chemical
Given the investment horizon of 90 days Microsoft is expected to generate 0.8 times more return on investment than Wuxi Chemical. However, Microsoft is 1.26 times less risky than Wuxi Chemical. It trades about 0.06 of its potential returns per unit of risk. Wuxi Chemical Equipment is currently generating about -0.01 per unit of risk. If you would invest 43,933 in Microsoft on October 25, 2024 and sell it today you would earn a total of 687.00 from holding Microsoft or generate 1.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 90.48% |
| Values | Daily Returns |
Microsoft vs. Wuxi Chemical Equipment
Performance |
| Timeline |
| Microsoft |
| Wuxi Chemical Equipment |
Microsoft and Wuxi Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Wuxi Chemical
The main advantage of trading using opposite Microsoft and Wuxi Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Wuxi Chemical 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 Wuxi Chemical will offset losses from the drop in Wuxi Chemical's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. BLOCK INC | Microsoft vs. Adobe Systems Incorporated |
| Wuxi Chemical vs. Shanghai Construction Group | Wuxi Chemical vs. Tederic Machinery Co | Wuxi Chemical vs. Tonghua Grape Wine | Wuxi Chemical vs. Nanxing Furniture Machinery |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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