Correlation Between Microsoft and Hansa Investment
Can any of the company-specific risk be diversified away by investing in both Microsoft and Hansa Investment 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 Hansa Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Hansa Investment, you can compare the effects of market volatilities on Microsoft and Hansa Investment 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 Hansa Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Hansa Investment.
Diversification Opportunities for Microsoft and Hansa Investment
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and Hansa is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Hansa Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hansa Investment 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 Hansa Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hansa Investment has no effect on the direction of Microsoft i.e., Microsoft and Hansa Investment go up and down completely randomly.
Pair Corralation between Microsoft and Hansa Investment
Assuming the 90 days trading horizon Microsoft is expected to generate 0.98 times more return on investment than Hansa Investment. However, Microsoft is 1.03 times less risky than Hansa Investment. It trades about 0.09 of its potential returns per unit of risk. Hansa Investment is currently generating about 0.04 per unit of risk. If you would invest 23,424 in Microsoft on September 3, 2024 and sell it today you would earn a total of 19,026 from holding Microsoft or generate 81.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Microsoft vs. Hansa Investment
Performance |
| Timeline |
| Microsoft |
| Hansa Investment |
Microsoft and Hansa Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Hansa Investment
The main advantage of trading using opposite Microsoft and Hansa Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Hansa Investment 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 Hansa Investment will offset losses from the drop in Hansa Investment's long position.| Microsoft vs. Catalyst Media Group | Microsoft vs. CATLIN GROUP | Microsoft vs. RTW Venture Fund | Microsoft vs. Secure Property Development |
| Hansa Investment vs. Hansa Biopharma AB | Hansa Investment vs. Hansa Trust | Hansa Investment vs. Eastman Chemical Co | Hansa Investment vs. American Tower REIT |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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