Correlation Between Microsoft and Beijing Gas
Can any of the company-specific risk be diversified away by investing in both Microsoft and Beijing Gas 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 Beijing Gas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Beijing Gas Blue, you can compare the effects of market volatilities on Microsoft and Beijing Gas 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 Beijing Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Beijing Gas.
Diversification Opportunities for Microsoft and Beijing Gas
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Microsoft and Beijing is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Beijing Gas Blue in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Gas Blue 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 Beijing Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Gas Blue has no effect on the direction of Microsoft i.e., Microsoft and Beijing Gas go up and down completely randomly.
Pair Corralation between Microsoft and Beijing Gas
Given the investment horizon of 90 days Microsoft is expected to generate 0.09 times more return on investment than Beijing Gas. However, Microsoft is 10.82 times less risky than Beijing Gas. It trades about -0.04 of its potential returns per unit of risk. Beijing Gas Blue is currently generating about -0.21 per unit of risk. If you would invest 43,167 in Microsoft on August 31, 2024 and sell it today you would lose (821.00) from holding Microsoft or give up 1.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Microsoft vs. Beijing Gas Blue
Performance |
| Timeline |
| Microsoft |
| Beijing Gas Blue |
Microsoft and Beijing Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Beijing Gas
The main advantage of trading using opposite Microsoft and Beijing Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Beijing Gas 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 Beijing Gas will offset losses from the drop in Beijing Gas' long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Beijing Gas vs. ENN Energy Holdings | Beijing Gas vs. EverGen Infrastructure Corp | Beijing Gas vs. OPAL Fuels | Beijing Gas vs. Atmos Energy |
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.
Other Complementary Tools
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |