Correlation Between Microsoft and CanSino Biologics

Specify exactly 2 symbols:
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 Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy98.22%
ValuesDaily Returns

Microsoft  vs.  CanSino Biologics

 Performance 
       Timeline  
Microsoft 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 2 (%) 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 current stock price uproar, may contribute to short-horizon losses for the private investors.
CanSino Biologics 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in CanSino Biologics are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CanSino Biologics reported solid returns over the last few months and may actually be approaching a breakup point.

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.
The idea behind Microsoft and CanSino Biologics 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.
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.

Other Complementary Tools

Earnings Calls
Check upcoming earnings announcements updated hourly across public exchanges
Correlation Analysis
Reduce portfolio risk simply by holding instruments which are not perfectly correlated
Volatility Analysis
Get historical volatility and risk analysis based on latest market data
Portfolio Volatility
Check portfolio volatility and analyze historical return density to properly model market risk
Commodity Directory
Find actively traded commodities issued by global exchanges