Correlation Between Microsoft and HiTi Digital
Can any of the company-specific risk be diversified away by investing in both Microsoft and HiTi Digital 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 HiTi Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and HiTi Digital, you can compare the effects of market volatilities on Microsoft and HiTi Digital 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 HiTi Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and HiTi Digital.
Diversification Opportunities for Microsoft and HiTi Digital
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and HiTi is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and HiTi Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HiTi Digital 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 HiTi Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HiTi Digital has no effect on the direction of Microsoft i.e., Microsoft and HiTi Digital go up and down completely randomly.
Pair Corralation between Microsoft and HiTi Digital
Given the investment horizon of 90 days Microsoft is expected to generate 11.84 times less return on investment than HiTi Digital. But when comparing it to its historical volatility, Microsoft is 6.61 times less risky than HiTi Digital. It trades about 0.04 of its potential returns per unit of risk. HiTi Digital is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 697.00 in HiTi Digital on August 26, 2024 and sell it today you would earn a total of 1,054 from holding HiTi Digital or generate 151.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.79% |
| Values | Daily Returns |
Microsoft vs. HiTi Digital
Performance |
| Timeline |
| Microsoft |
| HiTi Digital |
Microsoft and HiTi Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and HiTi Digital
The main advantage of trading using opposite Microsoft and HiTi Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, HiTi Digital 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 HiTi Digital will offset losses from the drop in HiTi Digital's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| HiTi Digital vs. Novatek Microelectronics Corp | HiTi Digital vs. Quanta Computer | HiTi Digital vs. United Microelectronics |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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