Correlation Between Microsoft and AiXin Life
Can any of the company-specific risk be diversified away by investing in both Microsoft and AiXin Life 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 AiXin Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and AiXin Life International, you can compare the effects of market volatilities on Microsoft and AiXin Life 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 AiXin Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and AiXin Life.
Diversification Opportunities for Microsoft and AiXin Life
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Microsoft and AiXin is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and AiXin Life International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AiXin Life 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 AiXin Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AiXin Life International has no effect on the direction of Microsoft i.e., Microsoft and AiXin Life go up and down completely randomly.
Pair Corralation between Microsoft and AiXin Life
Given the investment horizon of 90 days Microsoft is expected to generate 0.05 times more return on investment than AiXin Life. However, Microsoft is 19.58 times less risky than AiXin Life. It trades about 0.32 of its potential returns per unit of risk. AiXin Life International is currently generating about -0.22 per unit of risk. If you would invest 42,218 in Microsoft on September 13, 2024 and sell it today you would earn a total of 3,249 from holding Microsoft or generate 7.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Microsoft vs. AiXin Life International
Performance |
| Timeline |
| Microsoft |
| AiXin Life International |
Microsoft and AiXin Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and AiXin Life
The main advantage of trading using opposite Microsoft and AiXin Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, AiXin Life 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 AiXin Life will offset losses from the drop in AiXin Life's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| AiXin Life vs. Bunzl plc | AiXin Life vs. Wanderport Corp | AiXin Life vs. Innovative Food Hldg | AiXin Life vs. Calavo Growers |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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