Correlation Between Microsoft and Ping An
Can any of the company-specific risk be diversified away by investing in both Microsoft and Ping An 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 Ping An into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Ping An Insurance, you can compare the effects of market volatilities on Microsoft and Ping An 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 Ping An. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Ping An.
Diversification Opportunities for Microsoft and Ping An
Good diversification
The 3 months correlation between Microsoft and Ping is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Ping An Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ping An Insurance 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 Ping An. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ping An Insurance has no effect on the direction of Microsoft i.e., Microsoft and Ping An go up and down completely randomly.
Pair Corralation between Microsoft and Ping An
Given the investment horizon of 90 days Microsoft is expected to generate 1.31 times more return on investment than Ping An. However, Microsoft is 1.31 times more volatile than Ping An Insurance. It trades about -0.04 of its potential returns per unit of risk. Ping An Insurance is currently generating about -0.38 per unit of risk. If you would invest 42,574 in Microsoft on August 28, 2024 and sell it today you would lose (695.00) from holding Microsoft or give up 1.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Ping An Insurance
Performance |
| Timeline |
| Microsoft |
| Ping An Insurance |
Microsoft and Ping An Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Ping An
The main advantage of trading using opposite Microsoft and Ping An positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Ping An 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 Ping An will offset losses from the drop in Ping An's long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Paysafe |
| Ping An vs. CNO Financial Group | Ping An vs. Genworth Financial | Ping An vs. MetLife Preferred Stock | Ping An vs. Prudential Public Limited |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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