Correlation Between Microsoft and Hsinjing Holding

Can any of the company-specific risk be diversified away by investing in both Microsoft and Hsinjing Holding 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 Hsinjing Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Microsoft and Hsinjing Holding Co, you can compare the effects of market volatilities on Microsoft and Hsinjing Holding 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 Hsinjing Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Hsinjing Holding.

Diversification Opportunities for Microsoft and Hsinjing Holding

-0.35

Correlation Coefficient

Microsoft  Hsinjing Holding

Very good diversification

The 3 months correlation between Microsoft and Hsinjing is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Hsinjing Holding Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hsinjing Holding 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 Hsinjing Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hsinjing Holding has no effect on the direction of Microsoft i.e., Microsoft and Hsinjing Holding go up and down completely randomly.

Pair Corralation between Microsoft and Hsinjing Holding

Given the investment horizon of 90 days Microsoft is expected to generate 0.49 times more return on investment than Hsinjing Holding. However, Microsoft is 2.02 times less risky than Hsinjing Holding. It trades about -0.2 of its potential returns per unit of risk. Hsinjing Holding Co is currently generating about -0.15 per unit of risk. If you would invest  44,357  in Microsoft on October 7, 2024 and sell it today you would lose (2,022) from holding Microsoft or give up 4.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Microsoft  vs.  Hsinjing Holding Co

Microsoft

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Microsoft is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Hsinjing Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hsinjing Holding Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Microsoft and Hsinjing Holding

The main advantage of trading using opposite Microsoft and Hsinjing Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Hsinjing Holding 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 Hsinjing Holding will offset losses from the drop in Hsinjing Holding's long position.

The idea behind Microsoft and Hsinjing Holding Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.