Correlation Between Microsoft and PACIFIC ONLINE
Can any of the company-specific risk be diversified away by investing in both Microsoft and PACIFIC ONLINE 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 PACIFIC ONLINE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and PACIFIC ONLINE, you can compare the effects of market volatilities on Microsoft and PACIFIC ONLINE 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 PACIFIC ONLINE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and PACIFIC ONLINE.
Diversification Opportunities for Microsoft and PACIFIC ONLINE
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Microsoft and PACIFIC is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and PACIFIC ONLINE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PACIFIC ONLINE 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 PACIFIC ONLINE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PACIFIC ONLINE has no effect on the direction of Microsoft i.e., Microsoft and PACIFIC ONLINE go up and down completely randomly.
Pair Corralation between Microsoft and PACIFIC ONLINE
If you would invest 38,972 in Microsoft on September 20, 2024 and sell it today you would earn a total of 4,108 from holding Microsoft or generate 10.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. PACIFIC ONLINE
Performance |
| Timeline |
| Microsoft |
| PACIFIC ONLINE |
Microsoft and PACIFIC ONLINE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and PACIFIC ONLINE
The main advantage of trading using opposite Microsoft and PACIFIC ONLINE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, PACIFIC ONLINE 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 PACIFIC ONLINE will offset losses from the drop in PACIFIC ONLINE's long position.| Microsoft vs. MUTUIONLINE | Microsoft vs. Evolution Mining Limited | Microsoft vs. BE Semiconductor Industries | Microsoft vs. PACIFIC ONLINE |
| PACIFIC ONLINE vs. Apple Inc | PACIFIC ONLINE vs. Apple Inc | PACIFIC ONLINE vs. Apple Inc | PACIFIC ONLINE vs. Microsoft |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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