Correlation Between Microsoft and Xinyuan Real
Can any of the company-specific risk be diversified away by investing in both Microsoft and Xinyuan Real 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 Xinyuan Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Xinyuan Real Estate, you can compare the effects of market volatilities on Microsoft and Xinyuan Real 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 Xinyuan Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Xinyuan Real.
Diversification Opportunities for Microsoft and Xinyuan Real
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and Xinyuan is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Xinyuan Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinyuan Real Estate 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 Xinyuan Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinyuan Real Estate has no effect on the direction of Microsoft i.e., Microsoft and Xinyuan Real go up and down completely randomly.
Pair Corralation between Microsoft and Xinyuan Real
Given the investment horizon of 90 days Microsoft is expected to generate 0.5 times more return on investment than Xinyuan Real. However, Microsoft is 2.02 times less risky than Xinyuan Real. It trades about -0.06 of its potential returns per unit of risk. Xinyuan Real Estate is currently generating about -0.13 per unit of risk. If you would invest 42,375 in Microsoft on August 24, 2024 and sell it today you would lose (1,088) from holding Microsoft or give up 2.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Microsoft vs. Xinyuan Real Estate
Performance |
| Timeline |
| Microsoft |
| Xinyuan Real Estate |
Microsoft and Xinyuan Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Xinyuan Real
The main advantage of trading using opposite Microsoft and Xinyuan Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Xinyuan Real 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 Xinyuan Real will offset losses from the drop in Xinyuan Real's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Xinyuan Real vs. AMREP | Xinyuan Real vs. Alset Ehome International | Xinyuan Real vs. Landsea Homes Corp | Xinyuan Real vs. Bayport International Holdings |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
Other Complementary Tools
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |