Correlation Between Microsoft and Amtech Systems
Can any of the company-specific risk be diversified away by investing in both Microsoft and Amtech Systems 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 Amtech Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Amtech Systems, you can compare the effects of market volatilities on Microsoft and Amtech Systems 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 Amtech Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Amtech Systems.
Diversification Opportunities for Microsoft and Amtech Systems
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and Amtech is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Amtech Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amtech Systems 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 Amtech Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amtech Systems has no effect on the direction of Microsoft i.e., Microsoft and Amtech Systems go up and down completely randomly.
Pair Corralation between Microsoft and Amtech Systems
Given the investment horizon of 90 days Microsoft is expected to under-perform the Amtech Systems. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 1.02 times less risky than Amtech Systems. The stock trades about -0.04 of its potential returns per unit of risk. The Amtech Systems is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 574.00 in Amtech Systems on August 28, 2024 and sell it today you would earn a total of 16.00 from holding Amtech Systems or generate 2.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Amtech Systems
Performance |
| Timeline |
| Microsoft |
| Amtech Systems |
Microsoft and Amtech Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Amtech Systems
The main advantage of trading using opposite Microsoft and Amtech Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Amtech Systems 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 Amtech Systems will offset losses from the drop in Amtech Systems' long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Paysafe |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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