Correlation Between Microsoft and Cafe24 Corp
Can any of the company-specific risk be diversified away by investing in both Microsoft and Cafe24 Corp 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 Cafe24 Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Cafe24 Corp, you can compare the effects of market volatilities on Microsoft and Cafe24 Corp 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 Cafe24 Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Cafe24 Corp.
Diversification Opportunities for Microsoft and Cafe24 Corp
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Microsoft and Cafe24 is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Cafe24 Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cafe24 Corp 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 Cafe24 Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cafe24 Corp has no effect on the direction of Microsoft i.e., Microsoft and Cafe24 Corp go up and down completely randomly.
Pair Corralation between Microsoft and Cafe24 Corp
Given the investment horizon of 90 days Microsoft is expected to generate 4.05 times less return on investment than Cafe24 Corp. But when comparing it to its historical volatility, Microsoft is 3.73 times less risky than Cafe24 Corp. It trades about 0.07 of its potential returns per unit of risk. Cafe24 Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,130,000 in Cafe24 Corp on November 5, 2024 and sell it today you would earn a total of 2,990,000 from holding Cafe24 Corp or generate 264.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 96.96% |
| Values | Daily Returns |
Microsoft vs. Cafe24 Corp
Performance |
| Timeline |
| Microsoft |
| Cafe24 Corp |
Microsoft and Cafe24 Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Cafe24 Corp
The main advantage of trading using opposite Microsoft and Cafe24 Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Cafe24 Corp 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 Cafe24 Corp will offset losses from the drop in Cafe24 Corp's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings |
| Cafe24 Corp vs. Samsung Publishing Co | Cafe24 Corp vs. Nh Investment And | Cafe24 Corp vs. Automobile Pc | Cafe24 Corp vs. Lotte Rental Co |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| 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 | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |