Correlation Between Microsoft and China Eastern
Can any of the company-specific risk be diversified away by investing in both Microsoft and China Eastern 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 China Eastern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and China Eastern Airlines, you can compare the effects of market volatilities on Microsoft and China Eastern 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 China Eastern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and China Eastern.
Diversification Opportunities for Microsoft and China Eastern
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and China is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and China Eastern Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Eastern Airlines 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 China Eastern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Eastern Airlines has no effect on the direction of Microsoft i.e., Microsoft and China Eastern go up and down completely randomly.
Pair Corralation between Microsoft and China Eastern
If you would invest 1,998 in China Eastern Airlines on August 29, 2024 and sell it today you would earn a total of 0.00 from holding China Eastern Airlines or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.35% |
| Values | Daily Returns |
Microsoft vs. China Eastern Airlines
Performance |
| Timeline |
| Microsoft |
| China Eastern Airlines |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Microsoft and China Eastern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and China Eastern
The main advantage of trading using opposite Microsoft and China Eastern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, China Eastern 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 China Eastern will offset losses from the drop in China Eastern's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| China Eastern vs. Alta Equipment Group | China Eastern vs. Triton International Limited | China Eastern vs. Semtech | China Eastern vs. Vestis |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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