Correlation Between Microsoft and PT Astra
Can any of the company-specific risk be diversified away by investing in both Microsoft and PT Astra 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 PT Astra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and PT Astra International, you can compare the effects of market volatilities on Microsoft and PT Astra 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 PT Astra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and PT Astra.
Diversification Opportunities for Microsoft and PT Astra
Poor diversification
The 3 months correlation between Microsoft and ASII is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and PT Astra International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Astra International 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 PT Astra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Astra International has no effect on the direction of Microsoft i.e., Microsoft and PT Astra go up and down completely randomly.
Pair Corralation between Microsoft and PT Astra
Given the investment horizon of 90 days Microsoft is expected to under-perform the PT Astra. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 13.33 times less risky than PT Astra. The stock trades about -0.08 of its potential returns per unit of risk. The PT Astra International is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 0.04 in PT Astra International on December 28, 2024 and sell it today you would lose (0.01) from holding PT Astra International or give up 25.0% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Microsoft vs. PT Astra International
Performance |
Timeline |
Microsoft |
PT Astra International |
Microsoft and PT Astra Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Microsoft and PT Astra
The main advantage of trading using opposite Microsoft and PT Astra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, PT Astra 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 PT Astra will offset losses from the drop in PT Astra's long position.Microsoft vs. Palo Alto Networks | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings | Microsoft vs. Zscaler |
PT Astra vs. Embotelladora Andina SA | PT Astra vs. Embotelladora Andina SA | PT Astra vs. Apple Rush | PT Astra vs. Alkame Holdings |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
Other Complementary Tools
Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |