Correlation Between Microsoft and Baolong International
Can any of the company-specific risk be diversified away by investing in both Microsoft and Baolong International 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 Baolong International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Baolong International Co, you can compare the effects of market volatilities on Microsoft and Baolong International 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 Baolong International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Baolong International.
Diversification Opportunities for Microsoft and Baolong International
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and Baolong is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Baolong International Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baolong International 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 Baolong International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baolong International has no effect on the direction of Microsoft i.e., Microsoft and Baolong International go up and down completely randomly.
Pair Corralation between Microsoft and Baolong International
Given the investment horizon of 90 days Microsoft is expected to generate 1.19 times more return on investment than Baolong International. However, Microsoft is 1.19 times more volatile than Baolong International Co. It trades about 0.02 of its potential returns per unit of risk. Baolong International Co is currently generating about -0.06 per unit of risk. If you would invest 41,195 in Microsoft on September 1, 2024 and sell it today you would earn a total of 1,151 from holding Microsoft or generate 2.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Microsoft vs. Baolong International Co
Performance |
| Timeline |
| Microsoft |
| Baolong International |
Microsoft and Baolong International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Baolong International
The main advantage of trading using opposite Microsoft and Baolong International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Baolong International 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 Baolong International will offset losses from the drop in Baolong International's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Baolong International vs. Basso Industry Corp | Baolong International vs. Chung Hsin Electric Machinery | Baolong International vs. TYC Brother Industrial | Baolong International vs. TECO Electric 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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