Correlation Between Microsoft and Jiangsu Cai

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

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

Diversification Opportunities for Microsoft and Jiangsu Cai

-0.81

Correlation Coefficient

Microsoft  Jiangsu Cai

Pay attention - limited upside

The 3 months correlation between Microsoft and Jiangsu is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Jiangsu Cai Qin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangsu Cai Qin 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 Jiangsu Cai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangsu Cai Qin has no effect on the direction of Microsoft i.e., Microsoft and Jiangsu Cai go up and down completely randomly.

Pair Corralation between Microsoft and Jiangsu Cai

Given the investment horizon of 90 days Microsoft is expected to under-perform the Jiangsu Cai. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 2.92 times less risky than Jiangsu Cai. The stock trades about -0.11 of its potential returns per unit of risk. The Jiangsu Cai Qin is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  1,851  in Jiangsu Cai Qin on December 25, 2024 and sell it today you would earn a total of  1,126  from holding Jiangsu Cai Qin or generate 60.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	96.61%
Values	Daily Returns

Microsoft  vs.  Jiangsu Cai Qin

Microsoft

Risk-Adjusted Performance

Very Weak

Over the last 90 days Microsoft has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Jiangsu Cai Qin

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jiangsu Cai Qin are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jiangsu Cai sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Microsoft and Jiangsu Cai

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

The idea behind Microsoft and Jiangsu Cai Qin 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.