Correlation Between Microsoft and Kings Town
Can any of the company-specific risk be diversified away by investing in both Microsoft and Kings Town 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 Kings Town into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Kings Town Bank, you can compare the effects of market volatilities on Microsoft and Kings Town 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 Kings Town. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Kings Town.
Diversification Opportunities for Microsoft and Kings Town
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Microsoft and Kings is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Kings Town Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kings Town Bank 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 Kings Town. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kings Town Bank has no effect on the direction of Microsoft i.e., Microsoft and Kings Town go up and down completely randomly.
Pair Corralation between Microsoft and Kings Town
Given the investment horizon of 90 days Microsoft is expected to generate 0.71 times more return on investment than Kings Town. However, Microsoft is 1.41 times less risky than Kings Town. It trades about 0.19 of its potential returns per unit of risk. Kings Town Bank is currently generating about -0.05 per unit of risk. If you would invest 40,554 in Microsoft on September 1, 2024 and sell it today you would earn a total of 1,792 from holding Microsoft or generate 4.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Microsoft vs. Kings Town Bank
Performance |
| Timeline |
| Microsoft |
| Kings Town Bank |
Microsoft and Kings Town Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Kings Town
The main advantage of trading using opposite Microsoft and Kings Town positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Kings Town 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 Kings Town will offset losses from the drop in Kings Town's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Kings Town vs. Taichung Commercial Bank | Kings Town vs. Far Eastern International | Kings Town vs. Taiwan Business Bank | Kings Town vs. Sinopac Financial Holdings |
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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