Correlation Between Microsoft and Guangzhou Hongli
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By analyzing existing cross correlation between Microsoft and Guangzhou Hongli Opto, you can compare the effects of market volatilities on Microsoft and Guangzhou Hongli 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 Guangzhou Hongli. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Guangzhou Hongli.
Diversification Opportunities for Microsoft and Guangzhou Hongli
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Microsoft and Guangzhou is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Guangzhou Hongli Opto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Hongli Opto 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 Guangzhou Hongli. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Hongli Opto has no effect on the direction of Microsoft i.e., Microsoft and Guangzhou Hongli go up and down completely randomly.
Pair Corralation between Microsoft and Guangzhou Hongli
Given the investment horizon of 90 days Microsoft is expected to under-perform the Guangzhou Hongli. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 2.86 times less risky than Guangzhou Hongli. The stock trades about -0.06 of its potential returns per unit of risk. The Guangzhou Hongli Opto is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 513.00 in Guangzhou Hongli Opto on October 4, 2024 and sell it today you would earn a total of 236.00 from holding Guangzhou Hongli Opto or generate 46.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 96.03% |
Values | Daily Returns |
Microsoft vs. Guangzhou Hongli Opto
Performance |
Timeline |
Microsoft |
Guangzhou Hongli Opto |
Microsoft and Guangzhou Hongli Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Microsoft and Guangzhou Hongli
The main advantage of trading using opposite Microsoft and Guangzhou Hongli positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Guangzhou Hongli 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 Guangzhou Hongli will offset losses from the drop in Guangzhou Hongli's long position.Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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