Correlation Between Microsoft and Sinher Technology
Can any of the company-specific risk be diversified away by investing in both Microsoft and Sinher Technology 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 Sinher Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Sinher Technology, you can compare the effects of market volatilities on Microsoft and Sinher Technology 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 Sinher Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Sinher Technology.
Diversification Opportunities for Microsoft and Sinher Technology
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and Sinher is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Sinher Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinher Technology 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 Sinher Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinher Technology has no effect on the direction of Microsoft i.e., Microsoft and Sinher Technology go up and down completely randomly.
Pair Corralation between Microsoft and Sinher Technology
Given the investment horizon of 90 days Microsoft is expected to generate 1.65 times more return on investment than Sinher Technology. However, Microsoft is 1.65 times more volatile than Sinher Technology. It trades about 0.09 of its potential returns per unit of risk. Sinher Technology is currently generating about -0.02 per unit of risk. If you would invest 24,146 in Microsoft on August 30, 2024 and sell it today you would earn a total of 18,153 from holding Microsoft or generate 75.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.97% |
| Values | Daily Returns |
Microsoft vs. Sinher Technology
Performance |
| Timeline |
| Microsoft |
| Sinher Technology |
Microsoft and Sinher Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Sinher Technology
The main advantage of trading using opposite Microsoft and Sinher Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Sinher Technology 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 Sinher Technology will offset losses from the drop in Sinher Technology's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Sinher Technology vs. Hsing Ta Cement | Sinher Technology vs. Capital Futures Corp | Sinher Technology vs. First Insurance Co | Sinher Technology vs. Yem Chio 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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