Correlation Between Microsoft and Nisshinbo Holdings
Can any of the company-specific risk be diversified away by investing in both Microsoft and Nisshinbo Holdings 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 Nisshinbo Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Nisshinbo Holdings, you can compare the effects of market volatilities on Microsoft and Nisshinbo Holdings 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 Nisshinbo Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Nisshinbo Holdings.
Diversification Opportunities for Microsoft and Nisshinbo Holdings
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Microsoft and Nisshinbo is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Nisshinbo Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nisshinbo Holdings 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 Nisshinbo Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nisshinbo Holdings has no effect on the direction of Microsoft i.e., Microsoft and Nisshinbo Holdings go up and down completely randomly.
Pair Corralation between Microsoft and Nisshinbo Holdings
Assuming the 90 days trading horizon Microsoft is expected to generate 0.85 times more return on investment than Nisshinbo Holdings. However, Microsoft is 1.18 times less risky than Nisshinbo Holdings. It trades about 0.47 of its potential returns per unit of risk. Nisshinbo Holdings is currently generating about -0.07 per unit of risk. If you would invest 39,243 in Microsoft on September 19, 2024 and sell it today you would earn a total of 4,007 from holding Microsoft or generate 10.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Nisshinbo Holdings
Performance |
| Timeline |
| Microsoft |
| Nisshinbo Holdings |
Microsoft and Nisshinbo Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Nisshinbo Holdings
The main advantage of trading using opposite Microsoft and Nisshinbo Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Nisshinbo Holdings 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 Nisshinbo Holdings will offset losses from the drop in Nisshinbo Holdings' long position.The idea behind Microsoft and Nisshinbo Holdings 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.| Nisshinbo Holdings vs. Nordic Semiconductor ASA | Nisshinbo Holdings vs. KRISPY KREME DL 01 | Nisshinbo Holdings vs. Cogent Communications Holdings | Nisshinbo Holdings vs. Chesapeake Utilities |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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