Correlation Between Microsoft and Senao International
Can any of the company-specific risk be diversified away by investing in both Microsoft and Senao International 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 Senao International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Senao International Co, you can compare the effects of market volatilities on Microsoft and Senao International 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 Senao International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Senao International.
Diversification Opportunities for Microsoft and Senao International
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and Senao is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Senao International Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Senao International 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 Senao International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Senao International has no effect on the direction of Microsoft i.e., Microsoft and Senao International go up and down completely randomly.
Pair Corralation between Microsoft and Senao International
Given the investment horizon of 90 days Microsoft is expected to under-perform the Senao International. In addition to that, Microsoft is 3.03 times more volatile than Senao International Co. It trades about -0.04 of its total potential returns per unit of risk. Senao International Co is currently generating about -0.07 per unit of volatility. If you would invest 3,515 in Senao International Co on August 30, 2024 and sell it today you would lose (35.00) from holding Senao International Co or give up 1.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Senao International Co
Performance |
| Timeline |
| Microsoft |
| Senao International |
Microsoft and Senao International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Senao International
The main advantage of trading using opposite Microsoft and Senao International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Senao International 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 Senao International will offset losses from the drop in Senao International's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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