Correlation Between Microsoft and Asia Medical
Can any of the company-specific risk be diversified away by investing in both Microsoft and Asia Medical 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 Asia Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Asia Medical Agricultural, you can compare the effects of market volatilities on Microsoft and Asia Medical 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 Asia Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Asia Medical.
Diversification Opportunities for Microsoft and Asia Medical
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Microsoft and Asia is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Asia Medical Agricultural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Medical Agricultural 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 Asia Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Medical Agricultural has no effect on the direction of Microsoft i.e., Microsoft and Asia Medical go up and down completely randomly.
Pair Corralation between Microsoft and Asia Medical
Given the investment horizon of 90 days Microsoft is expected to generate 0.38 times more return on investment than Asia Medical. However, Microsoft is 2.65 times less risky than Asia Medical. It trades about 0.17 of its potential returns per unit of risk. Asia Medical Agricultural is currently generating about 0.01 per unit of risk. If you would invest 40,764 in Microsoft on September 3, 2024 and sell it today you would earn a total of 1,582 from holding Microsoft or generate 3.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Microsoft vs. Asia Medical Agricultural
Performance |
| Timeline |
| Microsoft |
| Asia Medical Agricultural |
Microsoft and Asia Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Asia Medical
The main advantage of trading using opposite Microsoft and Asia Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Asia Medical 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 Asia Medical will offset losses from the drop in Asia Medical's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Asia Medical vs. Asian Alliance International | Asia Medical vs. International Network System | Asia Medical vs. The Klinique Med | Asia Medical vs. Exotic Food Public |
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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