Correlation Between Microsoft and SHIN ETSU
Can any of the company-specific risk be diversified away by investing in both Microsoft and SHIN ETSU 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 SHIN ETSU into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and SHIN ETSU CHEMICAL , you can compare the effects of market volatilities on Microsoft and SHIN ETSU 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 SHIN ETSU. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and SHIN ETSU.
Diversification Opportunities for Microsoft and SHIN ETSU
Very good diversification
The 3 months correlation between Microsoft and SHIN is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and SHIN ETSU CHEMICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHIN ETSU CHEMICAL 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 SHIN ETSU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHIN ETSU CHEMICAL has no effect on the direction of Microsoft i.e., Microsoft and SHIN ETSU go up and down completely randomly.
Pair Corralation between Microsoft and SHIN ETSU
Assuming the 90 days trading horizon Microsoft is expected to generate 0.94 times more return on investment than SHIN ETSU. However, Microsoft is 1.07 times less risky than SHIN ETSU. It trades about 0.25 of its potential returns per unit of risk. SHIN ETSU CHEMICAL is currently generating about 0.14 per unit of risk. If you would invest 37,381 in Microsoft on September 3, 2024 and sell it today you would earn a total of 2,674 from holding Microsoft or generate 7.15% 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. SHIN ETSU CHEMICAL
Performance |
| Timeline |
| Microsoft |
| SHIN ETSU CHEMICAL |
Microsoft and SHIN ETSU Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and SHIN ETSU
The main advantage of trading using opposite Microsoft and SHIN ETSU positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, SHIN ETSU 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 SHIN ETSU will offset losses from the drop in SHIN ETSU's long position.| Microsoft vs. Collins Foods Limited | Microsoft vs. United Natural Foods | Microsoft vs. USU Software AG | Microsoft vs. National Beverage Corp |
| SHIN ETSU vs. GigaMedia | SHIN ETSU vs. ULTRA CLEAN HLDGS | SHIN ETSU vs. FRACTAL GAMING GROUP | SHIN ETSU vs. Hochschild Mining plc |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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