Correlation Between Microsoft and Doosan Robotics

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

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

Diversification Opportunities for Microsoft and Doosan Robotics

-0.7

Correlation Coefficient

Microsoft  Doosan Robotics

Excellent diversification

The 3 months correlation between Microsoft and Doosan is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Doosan Robotics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Doosan Robotics 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 Doosan Robotics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Doosan Robotics has no effect on the direction of Microsoft i.e., Microsoft and Doosan Robotics go up and down completely randomly.

Pair Corralation between Microsoft and Doosan Robotics

Given the investment horizon of 90 days Microsoft is expected to generate 4.26 times less return on investment than Doosan Robotics. But when comparing it to its historical volatility, Microsoft is 3.63 times less risky than Doosan Robotics. It trades about 0.03 of its potential returns per unit of risk. Doosan Robotics is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  6,200,000  in Doosan Robotics on October 8, 2024 and sell it today you would earn a total of  350,000  from holding Doosan Robotics or generate 5.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Microsoft  vs.  Doosan Robotics

Microsoft

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 2 (%) 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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

Doosan Robotics

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Doosan Robotics are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Doosan Robotics may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Microsoft and Doosan Robotics

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

The idea behind Microsoft and Doosan Robotics 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.