Correlation Between Microsoft and Ganfeng Lithium

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

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

Diversification Opportunities for Microsoft and Ganfeng Lithium

-0.34

Correlation Coefficient

Microsoft  Ganfeng Lithium

Very good diversification

The 3 months correlation between Microsoft and Ganfeng is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Ganfeng Lithium Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ganfeng Lithium 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 Ganfeng Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ganfeng Lithium has no effect on the direction of Microsoft i.e., Microsoft and Ganfeng Lithium go up and down completely randomly.

Pair Corralation between Microsoft and Ganfeng Lithium

Given the investment horizon of 90 days Microsoft is expected to generate 0.28 times more return on investment than Ganfeng Lithium. However, Microsoft is 3.59 times less risky than Ganfeng Lithium. It trades about 0.1 of its potential returns per unit of risk. Ganfeng Lithium Co is currently generating about 0.01 per unit of risk. If you would invest  23,595  in Microsoft on September 20, 2024 and sell it today you would earn a total of  20,648  from holding Microsoft or generate 87.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Microsoft  vs.  Ganfeng Lithium Co

Microsoft

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 5 (%) 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.

Ganfeng Lithium

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ganfeng Lithium Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Ganfeng Lithium reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Microsoft and Ganfeng Lithium

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

The idea behind Microsoft and Ganfeng Lithium Co 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.