Correlation Between Microsoft and CanSino Biologics
Can any of the company-specific risk be diversified away by investing in both Microsoft and CanSino Biologics 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 CanSino Biologics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and CanSino Biologics, you can compare the effects of market volatilities on Microsoft and CanSino Biologics 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 CanSino Biologics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and CanSino Biologics.
Diversification Opportunities for Microsoft and CanSino Biologics
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Microsoft and CanSino is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and CanSino Biologics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CanSino Biologics 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 CanSino Biologics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CanSino Biologics has no effect on the direction of Microsoft i.e., Microsoft and CanSino Biologics go up and down completely randomly.
Pair Corralation between Microsoft and CanSino Biologics
Given the investment horizon of 90 days Microsoft is expected to generate 0.33 times more return on investment than CanSino Biologics. However, Microsoft is 3.01 times less risky than CanSino Biologics. It trades about 0.09 of its potential returns per unit of risk. CanSino Biologics is currently generating about -0.01 per unit of risk. If you would invest 23,571 in Microsoft on September 24, 2024 and sell it today you would earn a total of 20,089 from holding Microsoft or generate 85.23% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 98.22% |
Values | Daily Returns |
Microsoft vs. CanSino Biologics
Performance |
Timeline |
Microsoft |
CanSino Biologics |
Microsoft and CanSino Biologics Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Microsoft and CanSino Biologics
The main advantage of trading using opposite Microsoft and CanSino Biologics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, CanSino Biologics 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 CanSino Biologics will offset losses from the drop in CanSino Biologics' long position.Microsoft vs. BlackBerry | Microsoft vs. Global Blue Group | Microsoft vs. Aurora Mobile | Microsoft vs. Marqeta |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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