Correlation Between Microsoft and Amtran Technology
Can any of the company-specific risk be diversified away by investing in both Microsoft and Amtran Technology 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 Amtran Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Amtran Technology Co, you can compare the effects of market volatilities on Microsoft and Amtran Technology 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 Amtran Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Amtran Technology.
Diversification Opportunities for Microsoft and Amtran Technology
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and Amtran is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Amtran Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amtran Technology 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 Amtran Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amtran Technology has no effect on the direction of Microsoft i.e., Microsoft and Amtran Technology go up and down completely randomly.
Pair Corralation between Microsoft and Amtran Technology
Given the investment horizon of 90 days Microsoft is expected to generate 0.43 times more return on investment than Amtran Technology. However, Microsoft is 2.32 times less risky than Amtran Technology. It trades about 0.02 of its potential returns per unit of risk. Amtran Technology Co is currently generating about 0.0 per unit of risk. If you would invest 41,195 in Microsoft on August 30, 2024 and sell it today you would earn a total of 1,104 from holding Microsoft or generate 2.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Amtran Technology Co
Performance |
| Timeline |
| Microsoft |
| Amtran Technology |
Microsoft and Amtran Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Amtran Technology
The main advantage of trading using opposite Microsoft and Amtran Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Amtran Technology 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 Amtran Technology will offset losses from the drop in Amtran Technology's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Amtran Technology vs. Yulon Finance Corp | Amtran Technology vs. Taiwan Secom Co | Amtran Technology vs. Great Wall Enterprise |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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