Correlation Between Microsoft and HUDSON TECHNOLOGY
Can any of the company-specific risk be diversified away by investing in both Microsoft and HUDSON TECHNOLOGY 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 HUDSON TECHNOLOGY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and HUDSON TECHNOLOGY, you can compare the effects of market volatilities on Microsoft and HUDSON TECHNOLOGY 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 HUDSON TECHNOLOGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and HUDSON TECHNOLOGY.
Diversification Opportunities for Microsoft and HUDSON TECHNOLOGY
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and HUDSON is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and HUDSON TECHNOLOGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUDSON TECHNOLOGY 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 HUDSON TECHNOLOGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HUDSON TECHNOLOGY has no effect on the direction of Microsoft i.e., Microsoft and HUDSON TECHNOLOGY go up and down completely randomly.
Pair Corralation between Microsoft and HUDSON TECHNOLOGY
Assuming the 90 days trading horizon Microsoft is expected to generate 0.21 times more return on investment than HUDSON TECHNOLOGY. However, Microsoft is 4.67 times less risky than HUDSON TECHNOLOGY. It trades about 0.19 of its potential returns per unit of risk. HUDSON TECHNOLOGY is currently generating about -0.16 per unit of risk. If you would invest 37,900 in Microsoft on September 2, 2024 and sell it today you would earn a total of 2,090 from holding Microsoft or generate 5.51% 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. HUDSON TECHNOLOGY
Performance |
| Timeline |
| Microsoft |
| HUDSON TECHNOLOGY |
Microsoft and HUDSON TECHNOLOGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and HUDSON TECHNOLOGY
The main advantage of trading using opposite Microsoft and HUDSON TECHNOLOGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, HUDSON TECHNOLOGY 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 HUDSON TECHNOLOGY will offset losses from the drop in HUDSON TECHNOLOGY's long position.| Microsoft vs. WESTLAKE CHEMICAL | Microsoft vs. Silicon Motion Technology | Microsoft vs. AWILCO DRILLING PLC | Microsoft vs. PRECISION DRILLING P |
| HUDSON TECHNOLOGY vs. Apple Inc | HUDSON TECHNOLOGY vs. Apple Inc | HUDSON TECHNOLOGY vs. Apple Inc | HUDSON TECHNOLOGY vs. Apple Inc |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |