Correlation Between Microsoft and POSCO Thainox
Can any of the company-specific risk be diversified away by investing in both Microsoft and POSCO Thainox 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 POSCO Thainox into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and POSCO Thainox Public, you can compare the effects of market volatilities on Microsoft and POSCO Thainox 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 POSCO Thainox. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and POSCO Thainox.
Diversification Opportunities for Microsoft and POSCO Thainox
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Microsoft and POSCO is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and POSCO Thainox Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POSCO Thainox Public 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 POSCO Thainox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of POSCO Thainox Public has no effect on the direction of Microsoft i.e., Microsoft and POSCO Thainox go up and down completely randomly.
Pair Corralation between Microsoft and POSCO Thainox
Given the investment horizon of 90 days Microsoft is expected to generate 0.52 times more return on investment than POSCO Thainox. However, Microsoft is 1.92 times less risky than POSCO Thainox. It trades about 0.05 of its potential returns per unit of risk. POSCO Thainox Public is currently generating about -0.06 per unit of risk. If you would invest 43,048 in Microsoft on September 16, 2024 and sell it today you would earn a total of 1,679 from holding Microsoft or generate 3.9% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 95.38% |
Values | Daily Returns |
Microsoft vs. POSCO Thainox Public
Performance |
Timeline |
Microsoft |
POSCO Thainox Public |
Microsoft and POSCO Thainox Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Microsoft and POSCO Thainox
The main advantage of trading using opposite Microsoft and POSCO Thainox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, POSCO Thainox 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 POSCO Thainox will offset losses from the drop in POSCO Thainox's long position.Microsoft vs. Global Blue Group | Microsoft vs. Aurora Mobile | Microsoft vs. Marqeta | Microsoft vs. Nextnav Acquisition Corp |
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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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