Correlation Between Microsoft and CJ Seafood
Can any of the company-specific risk be diversified away by investing in both Microsoft and CJ Seafood 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 Microsoft and CJ Seafood into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and CJ Seafood Corp, you can compare the effects of market volatilities on Microsoft and CJ Seafood 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 CJ Seafood. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and CJ Seafood.
Diversification Opportunities for Microsoft and CJ Seafood
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and 011150 is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and CJ Seafood Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CJ Seafood Corp 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 CJ Seafood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CJ Seafood Corp has no effect on the direction of Microsoft i.e., Microsoft and CJ Seafood go up and down completely randomly.
Pair Corralation between Microsoft and CJ Seafood
Given the investment horizon of 90 days Microsoft is expected to generate 0.58 times more return on investment than CJ Seafood. However, Microsoft is 1.73 times less risky than CJ Seafood. It trades about 0.19 of its potential returns per unit of risk. CJ Seafood Corp is currently generating about -0.21 per unit of risk. If you would invest 40,554 in Microsoft on September 1, 2024 and sell it today you would earn a total of 1,792 from holding Microsoft or generate 4.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Microsoft vs. CJ Seafood Corp
Performance |
| Timeline |
| Microsoft |
| CJ Seafood Corp |
Microsoft and CJ Seafood Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and CJ Seafood
The main advantage of trading using opposite Microsoft and CJ Seafood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, CJ Seafood 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 CJ Seafood will offset losses from the drop in CJ Seafood's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| CJ Seafood vs. AptaBio Therapeutics | CJ Seafood vs. Daewoo SBI SPAC | CJ Seafood vs. Dream Security co | CJ Seafood vs. Microfriend |
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 Stocks Directory module to find actively traded stocks across global markets.
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