Correlation Between Microsoft and Austco Healthcare
Can any of the company-specific risk be diversified away by investing in both Microsoft and Austco Healthcare 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 Austco Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Austco Healthcare, you can compare the effects of market volatilities on Microsoft and Austco Healthcare 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 Austco Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Austco Healthcare.
Diversification Opportunities for Microsoft and Austco Healthcare
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Microsoft and Austco is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Austco Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Austco Healthcare 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 Austco Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Austco Healthcare has no effect on the direction of Microsoft i.e., Microsoft and Austco Healthcare go up and down completely randomly.
Pair Corralation between Microsoft and Austco Healthcare
Given the investment horizon of 90 days Microsoft is expected to generate 1.66 times less return on investment than Austco Healthcare. But when comparing it to its historical volatility, Microsoft is 2.4 times less risky than Austco Healthcare. It trades about 0.09 of its potential returns per unit of risk. Austco Healthcare is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 12.00 in Austco Healthcare on August 29, 2024 and sell it today you would earn a total of 13.00 from holding Austco Healthcare or generate 108.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.4% |
| Values | Daily Returns |
Microsoft vs. Austco Healthcare
Performance |
| Timeline |
| Microsoft |
| Austco Healthcare |
Microsoft and Austco Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Austco Healthcare
The main advantage of trading using opposite Microsoft and Austco Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Austco Healthcare 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 Austco Healthcare will offset losses from the drop in Austco Healthcare's long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Paysafe |
| Austco Healthcare vs. FSA Group | Austco Healthcare vs. Tamawood | Austco Healthcare vs. Rea Group | Austco Healthcare vs. CSL |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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