Correlation Between AcadeMedia and Microsoft
Can any of the company-specific risk be diversified away by investing in both AcadeMedia and Microsoft 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 AcadeMedia and Microsoft into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AcadeMedia AB and Microsoft, you can compare the effects of market volatilities on AcadeMedia and Microsoft 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 AcadeMedia with a short position of Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of AcadeMedia and Microsoft.
Diversification Opportunities for AcadeMedia and Microsoft
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between AcadeMedia and Microsoft is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding AcadeMedia AB and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft and AcadeMedia 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 AcadeMedia AB are associated (or correlated) with Microsoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft has no effect on the direction of AcadeMedia i.e., AcadeMedia and Microsoft go up and down completely randomly.
Pair Corralation between AcadeMedia and Microsoft
Assuming the 90 days trading horizon AcadeMedia is expected to generate 1.39 times less return on investment than Microsoft. But when comparing it to its historical volatility, AcadeMedia AB is 1.01 times less risky than Microsoft. It trades about 0.05 of its potential returns per unit of risk. Microsoft is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 25,573 in Microsoft on September 3, 2024 and sell it today you would earn a total of 16,877 from holding Microsoft or generate 66.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AcadeMedia AB vs. Microsoft
Performance |
| Timeline |
| AcadeMedia AB |
| Microsoft |
AcadeMedia and Microsoft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AcadeMedia and Microsoft
The main advantage of trading using opposite AcadeMedia and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AcadeMedia position performs unexpectedly, Microsoft 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 Microsoft will offset losses from the drop in Microsoft's long position.| AcadeMedia vs. Elmos Semiconductor SE | AcadeMedia vs. Capital Drilling | AcadeMedia vs. Nordic Semiconductor ASA | AcadeMedia vs. Taiwan Semiconductor Manufacturing |
| Microsoft vs. Catalyst Media Group | Microsoft vs. CATLIN GROUP | Microsoft vs. RTW Venture Fund | Microsoft vs. Secure Property Development |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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