Correlation Between Microsoft and Seegene
Can any of the company-specific risk be diversified away by investing in both Microsoft and Seegene 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 Seegene into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Seegene, you can compare the effects of market volatilities on Microsoft and Seegene 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 Seegene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Seegene.
Diversification Opportunities for Microsoft and Seegene
Modest diversification
The 3 months correlation between Microsoft and Seegene is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Seegene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seegene 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 Seegene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seegene has no effect on the direction of Microsoft i.e., Microsoft and Seegene go up and down completely randomly.
Pair Corralation between Microsoft and Seegene
Given the investment horizon of 90 days Microsoft is expected to generate 0.62 times more return on investment than Seegene. However, Microsoft is 1.61 times less risky than Seegene. It trades about 0.05 of its potential returns per unit of risk. Seegene is currently generating about -0.08 per unit of risk. If you would invest 41,229 in Microsoft on August 29, 2024 and sell it today you would earn a total of 1,570 from holding Microsoft or generate 3.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 92.19% |
| Values | Daily Returns |
Microsoft vs. Seegene
Performance |
| Timeline |
| Microsoft |
| Seegene |
Microsoft and Seegene Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Seegene
The main advantage of trading using opposite Microsoft and Seegene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Seegene 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 Seegene will offset losses from the drop in Seegene's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
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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