Correlation Between Microsoft and Hyundai Home
Can any of the company-specific risk be diversified away by investing in both Microsoft and Hyundai Home 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 Hyundai Home into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Hyundai Home Shopping, you can compare the effects of market volatilities on Microsoft and Hyundai Home 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 Hyundai Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Hyundai Home.
Diversification Opportunities for Microsoft and Hyundai Home
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Microsoft and Hyundai is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Hyundai Home Shopping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Home Shopping 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 Hyundai Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Home Shopping has no effect on the direction of Microsoft i.e., Microsoft and Hyundai Home go up and down completely randomly.
Pair Corralation between Microsoft and Hyundai Home
Given the investment horizon of 90 days Microsoft is expected to under-perform the Hyundai Home. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 2.23 times less risky than Hyundai Home. The stock trades about -0.21 of its potential returns per unit of risk. The Hyundai Home Shopping is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 4,840,000 in Hyundai Home Shopping on December 1, 2024 and sell it today you would earn a total of 370,000 from holding Hyundai Home Shopping or generate 7.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Hyundai Home Shopping
Performance |
| Timeline |
| Microsoft |
| Hyundai Home Shopping |
Microsoft and Hyundai Home Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Hyundai Home
The main advantage of trading using opposite Microsoft and Hyundai Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Hyundai Home 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 Hyundai Home will offset losses from the drop in Hyundai Home's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings |
| Hyundai Home vs. Alton Sports CoLtd | Hyundai Home vs. PLAYWITH | Hyundai Home vs. Sangsin Energy Display | Hyundai Home vs. Lotte Non Life Insurance |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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