Correlation Between Microsoft and Sino Horizon
Can any of the company-specific risk be diversified away by investing in both Microsoft and Sino Horizon 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 Sino Horizon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Sino Horizon Holdings, you can compare the effects of market volatilities on Microsoft and Sino Horizon 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 Sino Horizon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Sino Horizon.
Diversification Opportunities for Microsoft and Sino Horizon
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and Sino is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Sino Horizon Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sino Horizon Holdings 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 Sino Horizon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sino Horizon Holdings has no effect on the direction of Microsoft i.e., Microsoft and Sino Horizon go up and down completely randomly.
Pair Corralation between Microsoft and Sino Horizon
Given the investment horizon of 90 days Microsoft is expected to generate 0.73 times more return on investment than Sino Horizon. However, Microsoft is 1.37 times less risky than Sino Horizon. It trades about -0.06 of its potential returns per unit of risk. Sino Horizon Holdings is currently generating about -0.08 per unit of risk. If you would invest 42,785 in Microsoft on November 5, 2024 and sell it today you would lose (1,279) from holding Microsoft or give up 2.99% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 73.68% |
Values | Daily Returns |
Microsoft vs. Sino Horizon Holdings
Performance |
Timeline |
Microsoft |
Sino Horizon Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Microsoft and Sino Horizon Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Microsoft and Sino Horizon
The main advantage of trading using opposite Microsoft and Sino Horizon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Sino Horizon 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 Sino Horizon will offset losses from the drop in Sino Horizon's long position.Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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