Correlation Between Microsoft and ANGLO ASIAN
Can any of the company-specific risk be diversified away by investing in both Microsoft and ANGLO ASIAN 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 ANGLO ASIAN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and ANGLO ASIAN MINING, you can compare the effects of market volatilities on Microsoft and ANGLO ASIAN 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 ANGLO ASIAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and ANGLO ASIAN.
Diversification Opportunities for Microsoft and ANGLO ASIAN
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and ANGLO is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and ANGLO ASIAN MINING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ANGLO ASIAN MINING 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 ANGLO ASIAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ANGLO ASIAN MINING has no effect on the direction of Microsoft i.e., Microsoft and ANGLO ASIAN go up and down completely randomly.
Pair Corralation between Microsoft and ANGLO ASIAN
Assuming the 90 days trading horizon Microsoft is expected to under-perform the ANGLO ASIAN. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 1.53 times less risky than ANGLO ASIAN. The stock trades about -0.15 of its potential returns per unit of risk. The ANGLO ASIAN MINING is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 126.00 in ANGLO ASIAN MINING on October 11, 2024 and sell it today you would lose (2.00) from holding ANGLO ASIAN MINING or give up 1.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. ANGLO ASIAN MINING
Performance |
| Timeline |
| Microsoft |
| ANGLO ASIAN MINING |
Microsoft and ANGLO ASIAN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and ANGLO ASIAN
The main advantage of trading using opposite Microsoft and ANGLO ASIAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, ANGLO ASIAN 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 ANGLO ASIAN will offset losses from the drop in ANGLO ASIAN's long position.| Microsoft vs. Thai Beverage Public | Microsoft vs. CN MODERN DAIRY | Microsoft vs. Nomad Foods | Microsoft vs. INDOFOOD AGRI RES |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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