Correlation Between Microsoft and AFC Ajax
Can any of the company-specific risk be diversified away by investing in both Microsoft and AFC Ajax 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 AFC Ajax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and AFC Ajax NV, you can compare the effects of market volatilities on Microsoft and AFC Ajax 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 AFC Ajax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and AFC Ajax.
Diversification Opportunities for Microsoft and AFC Ajax
Very good diversification
The 3 months correlation between Microsoft and AFC is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and AFC Ajax NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AFC Ajax NV 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 AFC Ajax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AFC Ajax NV has no effect on the direction of Microsoft i.e., Microsoft and AFC Ajax go up and down completely randomly.
Pair Corralation between Microsoft and AFC Ajax
Given the investment horizon of 90 days Microsoft is expected to under-perform the AFC Ajax. In addition to that, Microsoft is 2.2 times more volatile than AFC Ajax NV. It trades about -0.09 of its total potential returns per unit of risk. AFC Ajax NV is currently generating about 0.09 per unit of volatility. If you would invest 982.00 in AFC Ajax NV on November 30, 2024 and sell it today you would earn a total of 28.00 from holding AFC Ajax NV or generate 2.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 93.18% |
| Values | Daily Returns |
Microsoft vs. AFC Ajax NV
Performance |
| Timeline |
| Microsoft |
| AFC Ajax NV |
Microsoft and AFC Ajax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and AFC Ajax
The main advantage of trading using opposite Microsoft and AFC Ajax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, AFC Ajax 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 AFC Ajax will offset losses from the drop in AFC Ajax's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings |
| AFC Ajax vs. Reinet Investments SCA | AFC Ajax vs. AMG Advanced Metallurgical | AFC Ajax vs. Accsys Technologies | AFC Ajax vs. BE Semiconductor Industries |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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