Correlation Between Microsoft and Hwaseung Industries
Can any of the company-specific risk be diversified away by investing in both Microsoft and Hwaseung Industries 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 Hwaseung Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Hwaseung Industries Co, you can compare the effects of market volatilities on Microsoft and Hwaseung Industries 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 Hwaseung Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Hwaseung Industries.
Diversification Opportunities for Microsoft and Hwaseung Industries
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and Hwaseung is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Hwaseung Industries Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hwaseung Industries 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 Hwaseung Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hwaseung Industries has no effect on the direction of Microsoft i.e., Microsoft and Hwaseung Industries go up and down completely randomly.
Pair Corralation between Microsoft and Hwaseung Industries
Given the investment horizon of 90 days Microsoft is expected to generate 9.72 times less return on investment than Hwaseung Industries. But when comparing it to its historical volatility, Microsoft is 1.42 times less risky than Hwaseung Industries. It trades about 0.01 of its potential returns per unit of risk. Hwaseung Industries Co is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 323,000 in Hwaseung Industries Co on August 27, 2024 and sell it today you would earn a total of 87,500 from holding Hwaseung Industries Co or generate 27.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.74% |
| Values | Daily Returns |
Microsoft vs. Hwaseung Industries Co
Performance |
| Timeline |
| Microsoft |
| Hwaseung Industries |
Microsoft and Hwaseung Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Hwaseung Industries
The main advantage of trading using opposite Microsoft and Hwaseung Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Hwaseung Industries 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 Hwaseung Industries will offset losses from the drop in Hwaseung Industries' long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Rapid7 Inc |
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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