Correlation Between Microsoft and AGRICUL BK
Can any of the company-specific risk be diversified away by investing in both Microsoft and AGRICUL BK 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 AGRICUL BK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and AGRICUL BK CHINA H , you can compare the effects of market volatilities on Microsoft and AGRICUL BK 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 AGRICUL BK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and AGRICUL BK.
Diversification Opportunities for Microsoft and AGRICUL BK
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Microsoft and AGRICUL is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and AGRICUL BK CHINA H in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGRICUL BK CHINA 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 AGRICUL BK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGRICUL BK CHINA has no effect on the direction of Microsoft i.e., Microsoft and AGRICUL BK go up and down completely randomly.
Pair Corralation between Microsoft and AGRICUL BK
Assuming the 90 days trading horizon Microsoft is expected to generate 3.25 times less return on investment than AGRICUL BK. But when comparing it to its historical volatility, Microsoft is 4.26 times less risky than AGRICUL BK. It trades about 0.08 of its potential returns per unit of risk. AGRICUL BK CHINA H is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 12.00 in AGRICUL BK CHINA H on August 27, 2024 and sell it today you would earn a total of 34.00 from holding AGRICUL BK CHINA H or generate 283.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. AGRICUL BK CHINA H
Performance |
| Timeline |
| Microsoft |
| AGRICUL BK CHINA |
Microsoft and AGRICUL BK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and AGRICUL BK
The main advantage of trading using opposite Microsoft and AGRICUL BK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, AGRICUL BK 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 AGRICUL BK will offset losses from the drop in AGRICUL BK's long position.| Microsoft vs. Media and Games | Microsoft vs. Martin Marietta Materials | Microsoft vs. Summit Materials | Microsoft vs. Vulcan Materials |
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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