Correlation Between Microsoft and ANHUI CONCH
Can any of the company-specific risk be diversified away by investing in both Microsoft and ANHUI CONCH 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 ANHUI CONCH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and ANHUI CH H , you can compare the effects of market volatilities on Microsoft and ANHUI CONCH 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 ANHUI CONCH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and ANHUI CONCH.
Diversification Opportunities for Microsoft and ANHUI CONCH
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and ANHUI is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and ANHUI CH H in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ANHUI CONCH 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 ANHUI CONCH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ANHUI CONCH has no effect on the direction of Microsoft i.e., Microsoft and ANHUI CONCH go up and down completely randomly.
Pair Corralation between Microsoft and ANHUI CONCH
Given the investment horizon of 90 days Microsoft is expected to generate 9.62 times less return on investment than ANHUI CONCH. But when comparing it to its historical volatility, Microsoft is 8.22 times less risky than ANHUI CONCH. It trades about 0.15 of its potential returns per unit of risk. ANHUI CH H is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 259.00 in ANHUI CH H on September 2, 2024 and sell it today you would earn a total of 82.00 from holding ANHUI CH H or generate 31.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Microsoft vs. ANHUI CH H
Performance |
| Timeline |
| Microsoft |
| ANHUI CONCH |
Microsoft and ANHUI CONCH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and ANHUI CONCH
The main advantage of trading using opposite Microsoft and ANHUI CONCH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, ANHUI CONCH 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 ANHUI CONCH will offset losses from the drop in ANHUI CONCH's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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