Correlation Between Microsoft and Cheche Group
Can any of the company-specific risk be diversified away by investing in both Microsoft and Cheche Group 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 Cheche Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Cheche Group Class, you can compare the effects of market volatilities on Microsoft and Cheche Group 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 Cheche Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Cheche Group.
Diversification Opportunities for Microsoft and Cheche Group
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Microsoft and Cheche is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Cheche Group Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheche Group Class 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 Cheche Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheche Group Class has no effect on the direction of Microsoft i.e., Microsoft and Cheche Group go up and down completely randomly.
Pair Corralation between Microsoft and Cheche Group
Given the investment horizon of 90 days Microsoft is expected to under-perform the Cheche Group. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 2.34 times less risky than Cheche Group. The stock trades about -0.04 of its potential returns per unit of risk. The Cheche Group Class is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 78.00 in Cheche Group Class on August 30, 2024 and sell it today you would earn a total of 11.00 from holding Cheche Group Class or generate 14.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Cheche Group Class
Performance |
| Timeline |
| Microsoft |
| Cheche Group Class |
Microsoft and Cheche Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Cheche Group
The main advantage of trading using opposite Microsoft and Cheche Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Cheche Group 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 Cheche Group will offset losses from the drop in Cheche Group's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Cheche Group vs. Zillow Group Class | Cheche Group vs. Kanzhun Ltd ADR | Cheche Group vs. Outbrain | Cheche Group vs. TuanChe ADR |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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