Correlation Between Microsoft and Aino Health
Can any of the company-specific risk be diversified away by investing in both Microsoft and Aino Health 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 Aino Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Aino Health AB, you can compare the effects of market volatilities on Microsoft and Aino Health 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 Aino Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Aino Health.
Diversification Opportunities for Microsoft and Aino Health
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and Aino is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Aino Health AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aino Health AB 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 Aino Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aino Health AB has no effect on the direction of Microsoft i.e., Microsoft and Aino Health go up and down completely randomly.
Pair Corralation between Microsoft and Aino Health
Given the investment horizon of 90 days Microsoft is expected to under-perform the Aino Health. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 11.78 times less risky than Aino Health. The stock trades about -0.07 of its potential returns per unit of risk. The Aino Health AB is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 15.00 in Aino Health AB on November 29, 2024 and sell it today you would earn a total of 8.00 from holding Aino Health AB or generate 53.33% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 93.33% |
Values | Daily Returns |
Microsoft vs. Aino Health AB
Performance |
Timeline |
Microsoft |
Aino Health AB |
Microsoft and Aino Health Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Microsoft and Aino Health
The main advantage of trading using opposite Microsoft and Aino Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Aino Health 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 Aino Health will offset losses from the drop in Aino Health's long position.Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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