Correlation Between Microsoft and GUDANG GARAM
Can any of the company-specific risk be diversified away by investing in both Microsoft and GUDANG GARAM 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 GUDANG GARAM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and GUDANG GARAM, you can compare the effects of market volatilities on Microsoft and GUDANG GARAM 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 GUDANG GARAM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and GUDANG GARAM.
Diversification Opportunities for Microsoft and GUDANG GARAM
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Microsoft and GUDANG is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and GUDANG GARAM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GUDANG GARAM 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 GUDANG GARAM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GUDANG GARAM has no effect on the direction of Microsoft i.e., Microsoft and GUDANG GARAM go up and down completely randomly.
Pair Corralation between Microsoft and GUDANG GARAM
Assuming the 90 days trading horizon Microsoft is expected to generate 0.86 times more return on investment than GUDANG GARAM. However, Microsoft is 1.16 times less risky than GUDANG GARAM. It trades about 0.22 of its potential returns per unit of risk. GUDANG GARAM is currently generating about -0.23 per unit of risk. If you would invest 37,517 in Microsoft on September 1, 2024 and sell it today you would earn a total of 2,328 from holding Microsoft or generate 6.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Microsoft vs. GUDANG GARAM
Performance |
| Timeline |
| Microsoft |
| GUDANG GARAM |
Microsoft and GUDANG GARAM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and GUDANG GARAM
The main advantage of trading using opposite Microsoft and GUDANG GARAM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, GUDANG GARAM 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 GUDANG GARAM will offset losses from the drop in GUDANG GARAM's long position.| Microsoft vs. Gold Road Resources | Microsoft vs. Air Transport Services | Microsoft vs. Taiwan Semiconductor Manufacturing | Microsoft vs. Nordic Semiconductor ASA |
| GUDANG GARAM vs. SIVERS SEMICONDUCTORS AB | GUDANG GARAM vs. Darden Restaurants | GUDANG GARAM vs. Reliance Steel Aluminum | GUDANG GARAM vs. Q2M Managementberatung AG |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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