Correlation Between Microsoft and Sun Max
Can any of the company-specific risk be diversified away by investing in both Microsoft and Sun Max 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 Sun Max into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Sun Max Tech, you can compare the effects of market volatilities on Microsoft and Sun Max 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 Sun Max. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Sun Max.
Diversification Opportunities for Microsoft and Sun Max
Good diversification
The 3 months correlation between Microsoft and Sun is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Sun Max Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Max Tech 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 Sun Max. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Max Tech has no effect on the direction of Microsoft i.e., Microsoft and Sun Max go up and down completely randomly.
Pair Corralation between Microsoft and Sun Max
Given the investment horizon of 90 days Microsoft is expected to generate 0.7 times more return on investment than Sun Max. However, Microsoft is 1.43 times less risky than Sun Max. It trades about 0.08 of its potential returns per unit of risk. Sun Max Tech is currently generating about 0.04 per unit of risk. If you would invest 24,616 in Microsoft on August 26, 2024 and sell it today you would earn a total of 17,084 from holding Microsoft or generate 69.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.78% |
| Values | Daily Returns |
Microsoft vs. Sun Max Tech
Performance |
| Timeline |
| Microsoft |
| Sun Max Tech |
Microsoft and Sun Max Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Sun Max
The main advantage of trading using opposite Microsoft and Sun Max positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Sun Max 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 Sun Max will offset losses from the drop in Sun Max's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Sun Max vs. Quanta Computer | Sun Max vs. Wiwynn Corp | Sun Max vs. Getac Technology Corp | Sun Max vs. IEI Integration Corp |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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