Correlation Between Microsoft and CHAODA MODERN
Can any of the company-specific risk be diversified away by investing in both Microsoft and CHAODA MODERN 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 CHAODA MODERN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and CHAODA MODERN AGRI, you can compare the effects of market volatilities on Microsoft and CHAODA MODERN 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 CHAODA MODERN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and CHAODA MODERN.
Diversification Opportunities for Microsoft and CHAODA MODERN
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Microsoft and CHAODA is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and CHAODA MODERN AGRI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHAODA MODERN AGRI 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 CHAODA MODERN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHAODA MODERN AGRI has no effect on the direction of Microsoft i.e., Microsoft and CHAODA MODERN go up and down completely randomly.
Pair Corralation between Microsoft and CHAODA MODERN
Assuming the 90 days trading horizon Microsoft is expected to generate 0.15 times more return on investment than CHAODA MODERN. However, Microsoft is 6.53 times less risky than CHAODA MODERN. It trades about 0.1 of its potential returns per unit of risk. CHAODA MODERN AGRI is currently generating about -0.07 per unit of risk. If you would invest 38,818 in Microsoft on September 22, 2024 and sell it today you would earn a total of 3,312 from holding Microsoft or generate 8.53% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Microsoft vs. CHAODA MODERN AGRI
Performance |
Timeline |
Microsoft |
CHAODA MODERN AGRI |
Microsoft and CHAODA MODERN Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Microsoft and CHAODA MODERN
The main advantage of trading using opposite Microsoft and CHAODA MODERN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, CHAODA MODERN 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 CHAODA MODERN will offset losses from the drop in CHAODA MODERN's long position.Microsoft vs. Vastned Retail NV | ||
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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