Correlation Between Microsoft and Annexin Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Microsoft and Annexin Pharmaceuticals 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 Annexin Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Annexin Pharmaceuticals AB, you can compare the effects of market volatilities on Microsoft and Annexin Pharmaceuticals 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 Annexin Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Annexin Pharmaceuticals.
Diversification Opportunities for Microsoft and Annexin Pharmaceuticals
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Microsoft and Annexin is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Annexin Pharmaceuticals AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Annexin Pharmaceuticals 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 Annexin Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Annexin Pharmaceuticals has no effect on the direction of Microsoft i.e., Microsoft and Annexin Pharmaceuticals go up and down completely randomly.
Pair Corralation between Microsoft and Annexin Pharmaceuticals
Given the investment horizon of 90 days Microsoft is expected to generate 0.25 times more return on investment than Annexin Pharmaceuticals. However, Microsoft is 3.98 times less risky than Annexin Pharmaceuticals. It trades about 0.19 of its potential returns per unit of risk. Annexin Pharmaceuticals AB is currently generating about -0.05 per unit of risk. If you would invest 40,554 in Microsoft on September 1, 2024 and sell it today you would earn a total of 1,792 from holding Microsoft or generate 4.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
Microsoft vs. Annexin Pharmaceuticals AB
Performance |
| Timeline |
| Microsoft |
| Annexin Pharmaceuticals |
Microsoft and Annexin Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Annexin Pharmaceuticals
The main advantage of trading using opposite Microsoft and Annexin Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Annexin Pharmaceuticals 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 Annexin Pharmaceuticals will offset losses from the drop in Annexin Pharmaceuticals' long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Annexin Pharmaceuticals vs. Hansa Biopharma AB | Annexin Pharmaceuticals vs. Saniona AB | Annexin Pharmaceuticals vs. Oncopeptides AB |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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