Correlation Between Microsoft and Obducat AB
Can any of the company-specific risk be diversified away by investing in both Microsoft and Obducat AB 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 Obducat AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Obducat AB, you can compare the effects of market volatilities on Microsoft and Obducat AB 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 Obducat AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Obducat AB.
Diversification Opportunities for Microsoft and Obducat AB
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and Obducat is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Obducat AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Obducat AB 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 Obducat AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Obducat AB has no effect on the direction of Microsoft i.e., Microsoft and Obducat AB go up and down completely randomly.
Pair Corralation between Microsoft and Obducat AB
Assuming the 90 days trading horizon Microsoft is expected to generate 0.29 times more return on investment than Obducat AB. However, Microsoft is 3.41 times less risky than Obducat AB. It trades about 0.08 of its potential returns per unit of risk. Obducat AB is currently generating about -0.21 per unit of risk. If you would invest 38,219 in Microsoft on August 30, 2024 and sell it today you would earn a total of 1,826 from holding Microsoft or generate 4.78% 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. Obducat AB
Performance |
| Timeline |
| Microsoft |
| Obducat AB |
Microsoft and Obducat AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Obducat AB
The main advantage of trading using opposite Microsoft and Obducat AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Obducat AB 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 Obducat AB will offset losses from the drop in Obducat AB's long position.| Microsoft vs. MAVEN WIRELESS SWEDEN | Microsoft vs. BII Railway Transportation | Microsoft vs. Sporttotal AG | Microsoft vs. ETFS Coffee ETC |
| Obducat AB vs. Mizuho Financial Group | Obducat AB vs. JSC Halyk bank | Obducat AB vs. National Bank Holdings | Obducat AB vs. Daido Steel Co |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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