Correlation Between Microsoft and KPX Green
Can any of the company-specific risk be diversified away by investing in both Microsoft and KPX Green 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 KPX Green into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and KPX Green Chemical, you can compare the effects of market volatilities on Microsoft and KPX Green 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 KPX Green. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and KPX Green.
Diversification Opportunities for Microsoft and KPX Green
Very good diversification
The 3 months correlation between Microsoft and KPX is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and KPX Green Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KPX Green Chemical 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 KPX Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KPX Green Chemical has no effect on the direction of Microsoft i.e., Microsoft and KPX Green go up and down completely randomly.
Pair Corralation between Microsoft and KPX Green
Given the investment horizon of 90 days Microsoft is expected to under-perform the KPX Green. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 4.76 times less risky than KPX Green. The stock trades about -0.28 of its potential returns per unit of risk. The KPX Green Chemical is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 478,442 in KPX Green Chemical on October 14, 2024 and sell it today you would earn a total of 219,558 from holding KPX Green Chemical or generate 45.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. KPX Green Chemical
Performance |
| Timeline |
| Microsoft |
| KPX Green Chemical |
Microsoft and KPX Green Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and KPX Green
The main advantage of trading using opposite Microsoft and KPX Green positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, KPX Green 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 KPX Green will offset losses from the drop in KPX Green's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| KPX Green vs. CKH Food Health | KPX Green vs. Keyang Electric Machinery | KPX Green vs. Nam Hwa Construction | KPX Green vs. Hanshin Construction 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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