Correlation Between Microsoft and Sinopac Financial
Can any of the company-specific risk be diversified away by investing in both Microsoft and Sinopac Financial 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 Sinopac Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Sinopac Financial Holdings, you can compare the effects of market volatilities on Microsoft and Sinopac Financial 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 Sinopac Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Sinopac Financial.
Diversification Opportunities for Microsoft and Sinopac Financial
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Microsoft and Sinopac is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Sinopac Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinopac Financial 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 Sinopac Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinopac Financial has no effect on the direction of Microsoft i.e., Microsoft and Sinopac Financial go up and down completely randomly.
Pair Corralation between Microsoft and Sinopac Financial
Given the investment horizon of 90 days Microsoft is expected to generate 1.31 times more return on investment than Sinopac Financial. However, Microsoft is 1.31 times more volatile than Sinopac Financial Holdings. It trades about -0.06 of its potential returns per unit of risk. Sinopac Financial Holdings is currently generating about -0.09 per unit of risk. If you would invest 42,375 in Microsoft on August 24, 2024 and sell it today you would lose (1,088) from holding Microsoft or give up 2.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Sinopac Financial Holdings
Performance |
| Timeline |
| Microsoft |
| Sinopac Financial |
Microsoft and Sinopac Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Sinopac Financial
The main advantage of trading using opposite Microsoft and Sinopac Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Sinopac Financial 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 Sinopac Financial will offset losses from the drop in Sinopac Financial's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Sinopac Financial vs. Fubon Financial Holding | Sinopac Financial vs. CTBC Financial Holding | Sinopac Financial vs. Mega Financial Holding | Sinopac Financial vs. Cathay Financial Holding |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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