Correlation Between Microsoft and KYUSHU EL
Can any of the company-specific risk be diversified away by investing in both Microsoft and KYUSHU EL 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 KYUSHU EL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and KYUSHU EL PWR, you can compare the effects of market volatilities on Microsoft and KYUSHU EL 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 KYUSHU EL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and KYUSHU EL.
Diversification Opportunities for Microsoft and KYUSHU EL
Excellent diversification
The 3 months correlation between Microsoft and KYUSHU is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and KYUSHU EL PWR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KYUSHU EL PWR 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 KYUSHU EL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KYUSHU EL PWR has no effect on the direction of Microsoft i.e., Microsoft and KYUSHU EL go up and down completely randomly.
Pair Corralation between Microsoft and KYUSHU EL
Assuming the 90 days trading horizon Microsoft is expected to under-perform the KYUSHU EL. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 1.9 times less risky than KYUSHU EL. The stock trades about -0.05 of its potential returns per unit of risk. The KYUSHU EL PWR is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 830.00 in KYUSHU EL PWR on October 20, 2024 and sell it today you would lose (10.00) from holding KYUSHU EL PWR or give up 1.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. KYUSHU EL PWR
Performance |
| Timeline |
| Microsoft |
| KYUSHU EL PWR |
Microsoft and KYUSHU EL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and KYUSHU EL
The main advantage of trading using opposite Microsoft and KYUSHU EL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, KYUSHU EL 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 KYUSHU EL will offset losses from the drop in KYUSHU EL's long position.| Microsoft vs. Solstad Offshore ASA | Microsoft vs. SOFI TECHNOLOGIES | Microsoft vs. PKSHA TECHNOLOGY INC | Microsoft vs. THORNEY TECHS LTD |
| KYUSHU EL vs. IBERDROLA ADR1 EO | KYUSHU EL vs. SSE PLC ADR | KYUSHU EL vs. C PARAN EN | KYUSHU EL vs. CIA ENGER ADR |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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