Correlation Between Microsoft and Accsys Technologies
Can any of the company-specific risk be diversified away by investing in both Microsoft and Accsys Technologies 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 Accsys Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Accsys Technologies PLC, you can compare the effects of market volatilities on Microsoft and Accsys Technologies 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 Accsys Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Accsys Technologies.
Diversification Opportunities for Microsoft and Accsys Technologies
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Microsoft and Accsys is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Accsys Technologies PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accsys Technologies PLC 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 Accsys Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Accsys Technologies PLC has no effect on the direction of Microsoft i.e., Microsoft and Accsys Technologies go up and down completely randomly.
Pair Corralation between Microsoft and Accsys Technologies
Given the investment horizon of 90 days Microsoft is expected to generate 0.44 times more return on investment than Accsys Technologies. However, Microsoft is 2.25 times less risky than Accsys Technologies. It trades about 0.08 of its potential returns per unit of risk. Accsys Technologies PLC is currently generating about -0.04 per unit of risk. If you would invest 24,616 in Microsoft on August 25, 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 Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Accsys Technologies PLC
Performance |
| Timeline |
| Microsoft |
| Accsys Technologies PLC |
Microsoft and Accsys Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Accsys Technologies
The main advantage of trading using opposite Microsoft and Accsys Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Accsys Technologies 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 Accsys Technologies will offset losses from the drop in Accsys Technologies' long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Accsys Technologies vs. Turning Point Brands | Accsys Technologies vs. Constellation Brands Class | Accsys Technologies vs. Allegheny Technologies Incorporated | Accsys Technologies vs. Japan Tobacco ADR |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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