Correlation Between Microsoft and Longxing Chemical
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By analyzing existing cross correlation between Microsoft and Longxing Chemical Stock, you can compare the effects of market volatilities on Microsoft and Longxing 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 Longxing Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Longxing Chemical.
Diversification Opportunities for Microsoft and Longxing Chemical
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Microsoft and Longxing is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Longxing Chemical Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Longxing Chemical Stock 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 Longxing Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Longxing Chemical Stock has no effect on the direction of Microsoft i.e., Microsoft and Longxing Chemical go up and down completely randomly.
Pair Corralation between Microsoft and Longxing Chemical
Given the investment horizon of 90 days Microsoft is expected to generate 2.15 times less return on investment than Longxing Chemical. But when comparing it to its historical volatility, Microsoft is 2.92 times less risky than Longxing Chemical. It trades about 0.06 of its potential returns per unit of risk. Longxing Chemical Stock is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 534.00 in Longxing Chemical Stock on October 26, 2024 and sell it today you would earn a total of 10.00 from holding Longxing Chemical Stock or generate 1.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 90.48% |
| Values | Daily Returns |
Microsoft vs. Longxing Chemical Stock
Performance |
| Timeline |
| Microsoft |
| Longxing Chemical Stock |
Microsoft and Longxing Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Longxing Chemical
The main advantage of trading using opposite Microsoft and Longxing Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Longxing 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 Longxing Chemical will offset losses from the drop in Longxing Chemical's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. BLOCK INC | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings |
| Longxing Chemical vs. Beijing Baolande Software | Longxing Chemical vs. GuoChuang Software Co | Longxing Chemical vs. Northern United Publishing | Longxing Chemical vs. Guotai Epoint Software |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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