Correlation Between Microsoft and ASTRA INTERNATIONAL
Can any of the company-specific risk be diversified away by investing in both Microsoft and ASTRA INTERNATIONAL 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 ASTRA INTERNATIONAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and ASTRA INTERNATIONAL, you can compare the effects of market volatilities on Microsoft and ASTRA INTERNATIONAL 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 ASTRA INTERNATIONAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and ASTRA INTERNATIONAL.
Diversification Opportunities for Microsoft and ASTRA INTERNATIONAL
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and ASTRA is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and ASTRA INTERNATIONAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASTRA INTERNATIONAL 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 ASTRA INTERNATIONAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASTRA INTERNATIONAL has no effect on the direction of Microsoft i.e., Microsoft and ASTRA INTERNATIONAL go up and down completely randomly.
Pair Corralation between Microsoft and ASTRA INTERNATIONAL
Assuming the 90 days trading horizon Microsoft is expected to generate 1.78 times less return on investment than ASTRA INTERNATIONAL. But when comparing it to its historical volatility, Microsoft is 1.4 times less risky than ASTRA INTERNATIONAL. It trades about 0.03 of its potential returns per unit of risk. ASTRA INTERNATIONAL is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 28.00 in ASTRA INTERNATIONAL on September 3, 2024 and sell it today you would earn a total of 2.00 from holding ASTRA INTERNATIONAL or generate 7.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. ASTRA INTERNATIONAL
Performance |
| Timeline |
| Microsoft |
| ASTRA INTERNATIONAL |
Microsoft and ASTRA INTERNATIONAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and ASTRA INTERNATIONAL
The main advantage of trading using opposite Microsoft and ASTRA INTERNATIONAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, ASTRA INTERNATIONAL 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 ASTRA INTERNATIONAL will offset losses from the drop in ASTRA INTERNATIONAL's long position.The idea behind Microsoft and ASTRA INTERNATIONAL pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| ASTRA INTERNATIONAL vs. Salesforce | ASTRA INTERNATIONAL vs. Harmony Gold Mining | ASTRA INTERNATIONAL vs. BOS BETTER ONLINE | ASTRA INTERNATIONAL vs. PACIFIC ONLINE |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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