Correlation Between SANOK RUBBER and Microsoft

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

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

Diversification Opportunities for SANOK RUBBER and Microsoft

-0.01

Correlation Coefficient

SANOK RUBBER  Microsoft

Good diversification

The 3 months correlation between SANOK and Microsoft is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding SANOK RUBBER ZY and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft and SANOK RUBBER 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 SANOK RUBBER ZY 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 SANOK RUBBER i.e., SANOK RUBBER and Microsoft go up and down completely randomly.

Pair Corralation between SANOK RUBBER and Microsoft

Assuming the 90 days horizon SANOK RUBBER ZY is expected to generate 2.59 times more return on investment than Microsoft. However, SANOK RUBBER is 2.59 times more volatile than Microsoft. It trades about 0.12 of its potential returns per unit of risk. Microsoft is currently generating about 0.11 per unit of risk. If you would invest  353.00  in SANOK RUBBER ZY on September 17, 2024 and sell it today you would earn a total of  99.00  from holding SANOK RUBBER ZY or generate 28.05% return on investment over 90 days.

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

SANOK RUBBER ZY  vs.  Microsoft

SANOK RUBBER ZY

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SANOK RUBBER ZY are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SANOK RUBBER reported solid returns over the last few months and may actually be approaching a breakup point.

Microsoft

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile 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 SANOK RUBBER and Microsoft

The main advantage of trading using opposite SANOK RUBBER and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SANOK RUBBER 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 SANOK RUBBER ZY 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.

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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 Valuation module to check real value of public entities based on technical and fundamental data.