Correlation Between Microsoft and Infinitt Healthcare
Can any of the company-specific risk be diversified away by investing in both Microsoft and Infinitt Healthcare 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 Infinitt Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Infinitt Healthcare Co, you can compare the effects of market volatilities on Microsoft and Infinitt Healthcare 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 Infinitt Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Infinitt Healthcare.
Diversification Opportunities for Microsoft and Infinitt Healthcare
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and Infinitt is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Infinitt Healthcare Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infinitt Healthcare 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 Infinitt Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infinitt Healthcare has no effect on the direction of Microsoft i.e., Microsoft and Infinitt Healthcare go up and down completely randomly.
Pair Corralation between Microsoft and Infinitt Healthcare
Given the investment horizon of 90 days Microsoft is expected to under-perform the Infinitt Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 1.01 times less risky than Infinitt Healthcare. The stock trades about -0.04 of its potential returns per unit of risk. The Infinitt Healthcare Co is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 429,000 in Infinitt Healthcare Co on August 31, 2024 and sell it today you would earn a total of 32,000 from holding Infinitt Healthcare Co or generate 7.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Infinitt Healthcare Co
Performance |
| Timeline |
| Microsoft |
| Infinitt Healthcare |
Microsoft and Infinitt Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Infinitt Healthcare
The main advantage of trading using opposite Microsoft and Infinitt Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Infinitt Healthcare 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 Infinitt Healthcare will offset losses from the drop in Infinitt Healthcare's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Infinitt Healthcare vs. AptaBio Therapeutics | Infinitt Healthcare vs. Daewoo SBI SPAC | Infinitt Healthcare vs. Dream Security co | Infinitt Healthcare vs. Microfriend |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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