Correlation Between Microsoft and Asia Polymer
Can any of the company-specific risk be diversified away by investing in both Microsoft and Asia Polymer 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 Asia Polymer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Asia Polymer Corp, you can compare the effects of market volatilities on Microsoft and Asia Polymer 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 Asia Polymer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Asia Polymer.
Diversification Opportunities for Microsoft and Asia Polymer
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Microsoft and Asia is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Asia Polymer Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Polymer 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 Asia Polymer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Polymer Corp has no effect on the direction of Microsoft i.e., Microsoft and Asia Polymer go up and down completely randomly.
Pair Corralation between Microsoft and Asia Polymer
Given the investment horizon of 90 days Microsoft is expected to generate 3.49 times less return on investment than Asia Polymer. But when comparing it to its historical volatility, Microsoft is 1.95 times less risky than Asia Polymer. It trades about 0.02 of its potential returns per unit of risk. Asia Polymer Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,675 in Asia Polymer Corp on August 29, 2024 and sell it today you would earn a total of 30.00 from holding Asia Polymer Corp or generate 1.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Asia Polymer Corp
Performance |
| Timeline |
| Microsoft |
| Asia Polymer Corp |
Microsoft and Asia Polymer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Asia Polymer
The main advantage of trading using opposite Microsoft and Asia Polymer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Asia Polymer 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 Asia Polymer will offset losses from the drop in Asia Polymer's long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Paysafe |
| Asia Polymer vs. Cheng Shin Rubber | Asia Polymer vs. China Steel Chemical | Asia Polymer vs. Yulon Motor 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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