Correlation Between Microsoft and KUAISHOU TECHNOLOGY

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

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

Diversification Opportunities for Microsoft and KUAISHOU TECHNOLOGY

-0.37

Correlation Coefficient

Microsoft  KUAISHOU TECHNOLOGY

Very good diversification

The 3 months correlation between Microsoft and KUAISHOU is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and KUAISHOU TECHNOLOGY CLB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KUAISHOU TECHNOLOGY CLB 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 KUAISHOU TECHNOLOGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KUAISHOU TECHNOLOGY CLB has no effect on the direction of Microsoft i.e., Microsoft and KUAISHOU TECHNOLOGY go up and down completely randomly.

Pair Corralation between Microsoft and KUAISHOU TECHNOLOGY

Given the investment horizon of 90 days Microsoft is expected to generate 0.46 times more return on investment than KUAISHOU TECHNOLOGY. However, Microsoft is 2.17 times less risky than KUAISHOU TECHNOLOGY. It trades about 0.09 of its potential returns per unit of risk. KUAISHOU TECHNOLOGY CLB is currently generating about -0.01 per unit of risk. If you would invest  23,571  in Microsoft on September 23, 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 Against
Strength	Insignificant
Accuracy	98.03%
Values	Daily Returns

Microsoft  vs.  KUAISHOU TECHNOLOGY CLB

Microsoft

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 1 (%) 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.

KUAISHOU TECHNOLOGY CLB

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in KUAISHOU TECHNOLOGY CLB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, KUAISHOU TECHNOLOGY reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Microsoft and KUAISHOU TECHNOLOGY

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

The idea behind Microsoft and KUAISHOU TECHNOLOGY CLB 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.