Correlation Between Microsoft and Kee Tai
Can any of the company-specific risk be diversified away by investing in both Microsoft and Kee Tai 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 Kee Tai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Kee Tai Properties, you can compare the effects of market volatilities on Microsoft and Kee Tai 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 Kee Tai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Kee Tai.
Diversification Opportunities for Microsoft and Kee Tai
Very good diversification
The 3 months correlation between Microsoft and Kee is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Kee Tai Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kee Tai Properties 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 Kee Tai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kee Tai Properties has no effect on the direction of Microsoft i.e., Microsoft and Kee Tai go up and down completely randomly.
Pair Corralation between Microsoft and Kee Tai
Given the investment horizon of 90 days Microsoft is expected to generate 0.76 times more return on investment than Kee Tai. However, Microsoft is 1.31 times less risky than Kee Tai. It trades about 0.51 of its potential returns per unit of risk. Kee Tai Properties is currently generating about -0.23 per unit of risk. If you would invest 41,493 in Microsoft on September 19, 2024 and sell it today you would earn a total of 3,953 from holding Microsoft or generate 9.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Microsoft vs. Kee Tai Properties
Performance |
| Timeline |
| Microsoft |
| Kee Tai Properties |
Microsoft and Kee Tai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Kee Tai
The main advantage of trading using opposite Microsoft and Kee Tai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Kee Tai 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 Kee Tai will offset losses from the drop in Kee Tai's long position.| Microsoft vs. Global Blue Group | Microsoft vs. Aurora Mobile | Microsoft vs. Marqeta | Microsoft vs. Nextnav Acquisition Corp |
| Kee Tai vs. Hung Sheng Construction | Kee Tai vs. Chainqui Construction Development | Kee Tai vs. BES Engineering Co | Kee Tai vs. Long Bon International |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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