Correlation Between Microsoft and BANK MANDIRI
Can any of the company-specific risk be diversified away by investing in both Microsoft and BANK MANDIRI 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 BANK MANDIRI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and BANK MANDIRI, you can compare the effects of market volatilities on Microsoft and BANK MANDIRI 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 BANK MANDIRI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and BANK MANDIRI.
Diversification Opportunities for Microsoft and BANK MANDIRI
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Microsoft and BANK is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and BANK MANDIRI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK MANDIRI 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 BANK MANDIRI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANK MANDIRI has no effect on the direction of Microsoft i.e., Microsoft and BANK MANDIRI go up and down completely randomly.
Pair Corralation between Microsoft and BANK MANDIRI
Assuming the 90 days trading horizon Microsoft is expected to generate 0.7 times more return on investment than BANK MANDIRI. However, Microsoft is 1.43 times less risky than BANK MANDIRI. It trades about 0.09 of its potential returns per unit of risk. BANK MANDIRI is currently generating about 0.02 per unit of risk. If you would invest 22,187 in Microsoft on September 24, 2024 and sell it today you would earn a total of 19,658 from holding Microsoft or generate 88.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Microsoft vs. BANK MANDIRI
Performance |
| Timeline |
| Microsoft |
| BANK MANDIRI |
Microsoft and BANK MANDIRI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and BANK MANDIRI
The main advantage of trading using opposite Microsoft and BANK MANDIRI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, BANK MANDIRI 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 BANK MANDIRI will offset losses from the drop in BANK MANDIRI's long position.| Microsoft vs. Virtus Investment Partners | Microsoft vs. REINET INVESTMENTS SCA | Microsoft vs. Ares Management Corp | Microsoft vs. Cleanaway Waste Management |
| BANK MANDIRI vs. Apple Inc | BANK MANDIRI vs. Apple Inc | BANK MANDIRI vs. Apple Inc | BANK MANDIRI 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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