Correlation Between Microsoft and Sinher Technology

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Can any of the company-specific risk be diversified away by investing in both Microsoft and Sinher Technology 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 Sinher Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Sinher Technology, you can compare the effects of market volatilities on Microsoft and Sinher Technology 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 Sinher Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Sinher Technology.

Diversification Opportunities for Microsoft and Sinher Technology

MicrosoftSinherDiversified AwayMicrosoftSinherDiversified Away100%
-0.38
  Correlation Coefficient

Very good diversification

The 3 months correlation between Microsoft and Sinher is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Sinher Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinher Technology 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 Sinher Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinher Technology has no effect on the direction of Microsoft i.e., Microsoft and Sinher Technology go up and down completely randomly.

Pair Corralation between Microsoft and Sinher Technology

Given the investment horizon of 90 days Microsoft is expected to generate 1.06 times more return on investment than Sinher Technology. However, Microsoft is 1.06 times more volatile than Sinher Technology. It trades about 0.02 of its potential returns per unit of risk. Sinher Technology is currently generating about -0.01 per unit of risk. If you would invest  43,264  in Microsoft on September 22, 2024 and sell it today you would earn a total of  396.00  from holding Microsoft or generate 0.92% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Microsoft  vs.  Sinher Technology

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -50510
JavaScript chart by amCharts 3.21.15MSFT 4999
       Timeline  
Microsoft 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 1 (%) 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.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec410420430440450
Sinher Technology 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Sinher Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Sinher Technology is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec32.53333.53434.53535.53636.537

Microsoft and Sinher Technology Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.17-3.14-2.12-1.09-0.06950.961.983.04.035.05 0.050.100.150.200.25
JavaScript chart by amCharts 3.21.15MSFT 4999
       Returns  

Pair Trading with Microsoft and Sinher Technology

The main advantage of trading using opposite Microsoft and Sinher Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Sinher Technology 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 Sinher Technology will offset losses from the drop in Sinher Technology's long position.
The idea behind Microsoft and Sinher Technology 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.

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