Correlation Between Microsoft and Xinyi Solar
Can any of the company-specific risk be diversified away by investing in both Microsoft and Xinyi Solar 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 Xinyi Solar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Xinyi Solar Holdings, you can compare the effects of market volatilities on Microsoft and Xinyi Solar 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 Xinyi Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Xinyi Solar.
Diversification Opportunities for Microsoft and Xinyi Solar
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and Xinyi is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Xinyi Solar Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinyi Solar Holdings 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 Xinyi Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinyi Solar Holdings has no effect on the direction of Microsoft i.e., Microsoft and Xinyi Solar go up and down completely randomly.
Pair Corralation between Microsoft and Xinyi Solar
Given the investment horizon of 90 days Microsoft is expected to generate 0.31 times more return on investment than Xinyi Solar. However, Microsoft is 3.25 times less risky than Xinyi Solar. It trades about 0.15 of its potential returns per unit of risk. Xinyi Solar Holdings is currently generating about -0.07 per unit of risk. If you would invest 40,955 in Microsoft on September 2, 2024 and sell it today you would earn a total of 1,391 from holding Microsoft or generate 3.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Microsoft vs. Xinyi Solar Holdings
Performance |
| Timeline |
| Microsoft |
| Xinyi Solar Holdings |
Microsoft and Xinyi Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Xinyi Solar
The main advantage of trading using opposite Microsoft and Xinyi Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Xinyi Solar 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 Xinyi Solar will offset losses from the drop in Xinyi Solar's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Xinyi Solar vs. Superior Plus Corp | Xinyi Solar vs. NMI Holdings | Xinyi Solar vs. Origin Agritech | Xinyi Solar vs. SIVERS SEMICONDUCTORS AB |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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