Correlation Between Akoustis Technologies and Microsoft
Can any of the company-specific risk be diversified away by investing in both Akoustis Technologies 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 Akoustis Technologies and Microsoft into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Akoustis Technologies and Microsoft, you can compare the effects of market volatilities on Akoustis Technologies 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 Akoustis Technologies with a short position of Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of Akoustis Technologies and Microsoft.
Diversification Opportunities for Akoustis Technologies and Microsoft
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Akoustis and Microsoft is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Akoustis Technologies and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft and Akoustis Technologies 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 Akoustis Technologies 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 Akoustis Technologies i.e., Akoustis Technologies and Microsoft go up and down completely randomly.
Pair Corralation between Akoustis Technologies and Microsoft
Given the investment horizon of 90 days Akoustis Technologies is expected to under-perform the Microsoft. In addition to that, Akoustis Technologies is 6.5 times more volatile than Microsoft. It trades about -0.02 of its total potential returns per unit of risk. Microsoft is currently generating about 0.02 per unit of volatility. If you would invest 41,195 in Microsoft on September 1, 2024 and sell it today you would earn a total of 1,151 from holding Microsoft or generate 2.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Akoustis Technologies vs. Microsoft
Performance |
| Timeline |
| Akoustis Technologies |
| Microsoft |
Akoustis Technologies and Microsoft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Akoustis Technologies and Microsoft
The main advantage of trading using opposite Akoustis Technologies and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Akoustis Technologies 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.| Akoustis Technologies vs. Aviat Networks | Akoustis Technologies vs. AudioCodes | Akoustis Technologies vs. Silicom | Akoustis Technologies vs. Gilat Satellite Networks |
| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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