Correlation Between Microsoft and Miwon Chemicals
Can any of the company-specific risk be diversified away by investing in both Microsoft and Miwon Chemicals 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 Miwon Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Miwon Chemicals Co, you can compare the effects of market volatilities on Microsoft and Miwon Chemicals 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 Miwon Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Miwon Chemicals.
Diversification Opportunities for Microsoft and Miwon Chemicals
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Microsoft and Miwon is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Miwon Chemicals Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Miwon Chemicals 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 Miwon Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Miwon Chemicals has no effect on the direction of Microsoft i.e., Microsoft and Miwon Chemicals go up and down completely randomly.
Pair Corralation between Microsoft and Miwon Chemicals
Given the investment horizon of 90 days Microsoft is expected to generate 1.48 times more return on investment than Miwon Chemicals. However, Microsoft is 1.48 times more volatile than Miwon Chemicals Co. It trades about 0.06 of its potential returns per unit of risk. Miwon Chemicals Co is currently generating about -0.01 per unit of risk. If you would invest 42,574 in Microsoft on October 26, 2024 and sell it today you would earn a total of 2,097 from holding Microsoft or generate 4.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 96.72% |
| Values | Daily Returns |
Microsoft vs. Miwon Chemicals Co
Performance |
| Timeline |
| Microsoft |
| Miwon Chemicals |
Microsoft and Miwon Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Miwon Chemicals
The main advantage of trading using opposite Microsoft and Miwon Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Miwon Chemicals 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 Miwon Chemicals will offset losses from the drop in Miwon Chemicals' long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. BLOCK INC | Microsoft vs. Adobe Systems Incorporated |
| Miwon Chemicals vs. KB Financial Group | Miwon Chemicals vs. Shinhan Financial Group | Miwon Chemicals vs. Hana Financial | Miwon Chemicals vs. Woori Financial Group |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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