Correlation Between Microsoft and Bangkok Chain
Can any of the company-specific risk be diversified away by investing in both Microsoft and Bangkok Chain 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 Bangkok Chain into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Bangkok Chain Hospital, you can compare the effects of market volatilities on Microsoft and Bangkok Chain 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 Bangkok Chain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Bangkok Chain.
Diversification Opportunities for Microsoft and Bangkok Chain
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Microsoft and Bangkok is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Bangkok Chain Hospital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bangkok Chain Hospital 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 Bangkok Chain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bangkok Chain Hospital has no effect on the direction of Microsoft i.e., Microsoft and Bangkok Chain go up and down completely randomly.
Pair Corralation between Microsoft and Bangkok Chain
Given the investment horizon of 90 days Microsoft is expected to generate 0.89 times more return on investment than Bangkok Chain. However, Microsoft is 1.13 times less risky than Bangkok Chain. It trades about 0.06 of its potential returns per unit of risk. Bangkok Chain Hospital is currently generating about -0.01 per unit of risk. If you would invest 32,151 in Microsoft on August 31, 2024 and sell it today you would earn a total of 10,195 from holding Microsoft or generate 31.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.33% |
| Values | Daily Returns |
Microsoft vs. Bangkok Chain Hospital
Performance |
| Timeline |
| Microsoft |
| Bangkok Chain Hospital |
Microsoft and Bangkok Chain Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Bangkok Chain
The main advantage of trading using opposite Microsoft and Bangkok Chain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Bangkok Chain 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 Bangkok Chain will offset losses from the drop in Bangkok Chain's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Bangkok Chain vs. AP Public | Bangkok Chain vs. Advanced Information Technology | Bangkok Chain vs. AJ Plast Public | Bangkok Chain vs. Berli Jucker 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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