Correlation Between JIAHUA STORES and Microsoft

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

By analyzing existing cross correlation between JIAHUA STORES and Microsoft, you can compare the effects of market volatilities on JIAHUA STORES and Microsoft 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 JIAHUA STORES with a short position of Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of JIAHUA STORES and Microsoft.

Diversification Opportunities for JIAHUA STORES and Microsoft

0.0

Correlation Coefficient

JIAHUA STORES  Microsoft

Pay attention - limited upside

The 3 months correlation between JIAHUA and Microsoft is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding JIAHUA STORES and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft and JIAHUA STORES 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 JIAHUA STORES are associated (or correlated) with Microsoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft has no effect on the direction of JIAHUA STORES i.e., JIAHUA STORES and Microsoft go up and down completely randomly.

Pair Corralation between JIAHUA STORES and Microsoft

If you would invest  37,895  in Microsoft on October 1, 2024 and sell it today you would earn a total of  3,145  from holding Microsoft or generate 8.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

JIAHUA STORES  vs.  Microsoft

JIAHUA STORES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JIAHUA STORES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, JIAHUA STORES is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Microsoft

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Microsoft may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with JIAHUA STORES and Microsoft

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

The idea behind JIAHUA STORES and Microsoft 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.