Correlation Between Microsoft and Samhyun
Can any of the company-specific risk be diversified away by investing in both Microsoft and Samhyun 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 Samhyun into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Samhyun, you can compare the effects of market volatilities on Microsoft and Samhyun 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 Samhyun. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Samhyun.
Diversification Opportunities for Microsoft and Samhyun
Excellent diversification
The 3 months correlation between Microsoft and Samhyun is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Samhyun in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samhyun 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 Samhyun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samhyun has no effect on the direction of Microsoft i.e., Microsoft and Samhyun go up and down completely randomly.
Pair Corralation between Microsoft and Samhyun
Given the investment horizon of 90 days Microsoft is expected to under-perform the Samhyun. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 6.94 times less risky than Samhyun. The stock trades about -0.33 of its potential returns per unit of risk. The Samhyun is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 666,000 in Samhyun on October 15, 2024 and sell it today you would earn a total of 375,000 from holding Samhyun or generate 56.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Microsoft vs. Samhyun
Performance |
| Timeline |
| Microsoft |
| Samhyun |
Microsoft and Samhyun Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Samhyun
The main advantage of trading using opposite Microsoft and Samhyun positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Samhyun 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 Samhyun will offset losses from the drop in Samhyun's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Samhyun vs. NICE Information Service | Samhyun vs. SBI Investment KOREA | Samhyun vs. Jeong Moon Information | Samhyun vs. Jinro Distillers Co |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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