Correlation Between CITIC Resources and Microsoft
Can any of the company-specific risk be diversified away by investing in both CITIC Resources 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 CITIC Resources and Microsoft into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CITIC Resources Holdings and Microsoft, you can compare the effects of market volatilities on CITIC Resources 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 CITIC Resources with a short position of Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of CITIC Resources and Microsoft.
Diversification Opportunities for CITIC Resources and Microsoft
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CITIC and Microsoft is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding CITIC Resources Holdings and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft and CITIC Resources 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 CITIC Resources Holdings 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 CITIC Resources i.e., CITIC Resources and Microsoft go up and down completely randomly.
Pair Corralation between CITIC Resources and Microsoft
Assuming the 90 days horizon CITIC Resources Holdings is expected to generate 3.42 times more return on investment than Microsoft. However, CITIC Resources is 3.42 times more volatile than Microsoft. It trades about 0.2 of its potential returns per unit of risk. Microsoft is currently generating about -0.29 per unit of risk. If you would invest 1,073 in CITIC Resources Holdings on January 20, 2024 and sell it today you would earn a total of 156.00 from holding CITIC Resources Holdings or generate 14.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CITIC Resources Holdings vs. Microsoft
Performance |
| Timeline |
| CITIC Resources Holdings |
| Microsoft |
CITIC Resources and Microsoft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CITIC Resources and Microsoft
The main advantage of trading using opposite CITIC Resources and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CITIC Resources 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.| CITIC Resources vs. Avarone Metals | CITIC Resources vs. Azimut Exploration | CITIC Resources vs. Benton Resources |
| Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings | Microsoft vs. Cloudflare |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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