Correlation Between Microsoft and Longfor Properties
Can any of the company-specific risk be diversified away by investing in both Microsoft and Longfor Properties 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 Longfor Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Longfor Properties Co, you can compare the effects of market volatilities on Microsoft and Longfor Properties 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 Longfor Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Longfor Properties.
Diversification Opportunities for Microsoft and Longfor Properties
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and Longfor is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Longfor Properties Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Longfor Properties 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 Longfor Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Longfor Properties has no effect on the direction of Microsoft i.e., Microsoft and Longfor Properties go up and down completely randomly.
Pair Corralation between Microsoft and Longfor Properties
Given the investment horizon of 90 days Microsoft is expected to generate 0.3 times more return on investment than Longfor Properties. However, Microsoft is 3.29 times less risky than Longfor Properties. It trades about 0.1 of its potential returns per unit of risk. Longfor Properties Co is currently generating about -0.01 per unit of risk. If you would invest 22,345 in Microsoft on August 31, 2024 and sell it today you would earn a total of 20,001 from holding Microsoft or generate 89.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Microsoft vs. Longfor Properties Co
Performance |
| Timeline |
| Microsoft |
| Longfor Properties |
Microsoft and Longfor Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Longfor Properties
The main advantage of trading using opposite Microsoft and Longfor Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Longfor Properties 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 Longfor Properties will offset losses from the drop in Longfor Properties' long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Longfor Properties vs. Sun Hung Kai | Longfor Properties vs. Country Garden Holdings | Longfor Properties vs. Sino Land Co | Longfor Properties vs. Sun Hung Kai |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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