Correlation Between Microsoft and Seoul Electronics
Can any of the company-specific risk be diversified away by investing in both Microsoft and Seoul Electronics 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 Seoul Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Seoul Electronics Telecom, you can compare the effects of market volatilities on Microsoft and Seoul Electronics 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 Seoul Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Seoul Electronics.
Diversification Opportunities for Microsoft and Seoul Electronics
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and Seoul is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Seoul Electronics Telecom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seoul Electronics Telecom 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 Seoul Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seoul Electronics Telecom has no effect on the direction of Microsoft i.e., Microsoft and Seoul Electronics go up and down completely randomly.
Pair Corralation between Microsoft and Seoul Electronics
Given the investment horizon of 90 days Microsoft is expected to generate 1.19 times more return on investment than Seoul Electronics. However, Microsoft is 1.19 times more volatile than Seoul Electronics Telecom. It trades about -0.04 of its potential returns per unit of risk. Seoul Electronics Telecom is currently generating about -0.17 per unit of risk. If you would invest 42,388 in Microsoft on August 25, 2024 and sell it today you would lose (688.00) from holding Microsoft or give up 1.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Seoul Electronics Telecom
Performance |
| Timeline |
| Microsoft |
| Seoul Electronics Telecom |
Microsoft and Seoul Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Seoul Electronics
The main advantage of trading using opposite Microsoft and Seoul Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Seoul Electronics 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 Seoul Electronics will offset losses from the drop in Seoul Electronics' long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Seoul Electronics vs. CKH Food Health | Seoul Electronics vs. TK Chemical | Seoul Electronics vs. Golden Bridge Investment | Seoul Electronics vs. Tae Kyung Chemical |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |