Correlation Between Microsoft and Kginicis CoLtd
Can any of the company-specific risk be diversified away by investing in both Microsoft and Kginicis CoLtd 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 Kginicis CoLtd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Kginicis CoLtd, you can compare the effects of market volatilities on Microsoft and Kginicis CoLtd 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 Kginicis CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Kginicis CoLtd.
Diversification Opportunities for Microsoft and Kginicis CoLtd
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and Kginicis is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Kginicis CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kginicis CoLtd 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 Kginicis CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kginicis CoLtd has no effect on the direction of Microsoft i.e., Microsoft and Kginicis CoLtd go up and down completely randomly.
Pair Corralation between Microsoft and Kginicis CoLtd
Given the investment horizon of 90 days Microsoft is expected to generate 0.79 times more return on investment than Kginicis CoLtd. However, Microsoft is 1.27 times less risky than Kginicis CoLtd. It trades about 0.06 of its potential returns per unit of risk. Kginicis CoLtd is currently generating about -0.03 per unit of risk. If you would invest 33,425 in Microsoft on August 28, 2024 and sell it today you would earn a total of 8,454 from holding Microsoft or generate 25.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.05% |
| Values | Daily Returns |
Microsoft vs. Kginicis CoLtd
Performance |
| Timeline |
| Microsoft |
| Kginicis CoLtd |
Microsoft and Kginicis CoLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Kginicis CoLtd
The main advantage of trading using opposite Microsoft and Kginicis CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Kginicis CoLtd 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 Kginicis CoLtd will offset losses from the drop in Kginicis CoLtd's long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Paysafe |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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