Correlation Between Microsoft and Akr Corporindo
Can any of the company-specific risk be diversified away by investing in both Microsoft and Akr Corporindo 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 Akr Corporindo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Akr Corporindo Tbk, you can compare the effects of market volatilities on Microsoft and Akr Corporindo 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 Akr Corporindo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Akr Corporindo.
Diversification Opportunities for Microsoft and Akr Corporindo
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Microsoft and Akr is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Akr Corporindo Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akr Corporindo Tbk 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 Akr Corporindo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akr Corporindo Tbk has no effect on the direction of Microsoft i.e., Microsoft and Akr Corporindo go up and down completely randomly.
Pair Corralation between Microsoft and Akr Corporindo
Given the investment horizon of 90 days Microsoft is expected to generate 0.64 times more return on investment than Akr Corporindo. However, Microsoft is 1.57 times less risky than Akr Corporindo. It trades about -0.06 of its potential returns per unit of risk. Akr Corporindo Tbk is currently generating about -0.16 per unit of risk. If you would invest 42,375 in Microsoft on August 24, 2024 and sell it today you would lose (1,088) from holding Microsoft or give up 2.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Akr Corporindo Tbk
Performance |
| Timeline |
| Microsoft |
| Akr Corporindo Tbk |
Microsoft and Akr Corporindo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Akr Corporindo
The main advantage of trading using opposite Microsoft and Akr Corporindo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Akr Corporindo 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 Akr Corporindo will offset losses from the drop in Akr Corporindo's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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