Correlation Between AlzChem Group and Microsoft
Can any of the company-specific risk be diversified away by investing in both AlzChem Group 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 AlzChem Group and Microsoft into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AlzChem Group AG and Microsoft, you can compare the effects of market volatilities on AlzChem Group 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 AlzChem Group with a short position of Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of AlzChem Group and Microsoft.
Diversification Opportunities for AlzChem Group and Microsoft
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AlzChem and Microsoft is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding AlzChem Group AG and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft and AlzChem Group 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 AlzChem Group AG 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 AlzChem Group i.e., AlzChem Group and Microsoft go up and down completely randomly.
Pair Corralation between AlzChem Group and Microsoft
Assuming the 90 days trading horizon AlzChem Group AG is expected to under-perform the Microsoft. In addition to that, AlzChem Group is 3.14 times more volatile than Microsoft. It trades about -0.01 of its total potential returns per unit of risk. Microsoft is currently generating about 0.25 per unit of volatility. If you would invest 39,665 in Microsoft on September 24, 2024 and sell it today you would earn a total of 2,465 from holding Microsoft or generate 6.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AlzChem Group AG vs. Microsoft
Performance |
| Timeline |
| AlzChem Group AG |
| Microsoft |
AlzChem Group and Microsoft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AlzChem Group and Microsoft
The main advantage of trading using opposite AlzChem Group and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AlzChem Group 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.| AlzChem Group vs. Apple Inc | AlzChem Group vs. Apple Inc | AlzChem Group vs. Apple Inc | AlzChem Group vs. Apple Inc |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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