Correlation Between Microsoft and BIDV Securities
Can any of the company-specific risk be diversified away by investing in both Microsoft and BIDV Securities 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 BIDV Securities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and BIDV Securities JSC, you can compare the effects of market volatilities on Microsoft and BIDV Securities 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 BIDV Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and BIDV Securities.
Diversification Opportunities for Microsoft and BIDV Securities
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and BIDV is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and BIDV Securities JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BIDV Securities JSC 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 BIDV Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BIDV Securities JSC has no effect on the direction of Microsoft i.e., Microsoft and BIDV Securities go up and down completely randomly.
Pair Corralation between Microsoft and BIDV Securities
Given the investment horizon of 90 days Microsoft is expected to generate 100.72 times less return on investment than BIDV Securities. But when comparing it to its historical volatility, Microsoft is 72.81 times less risky than BIDV Securities. It trades about 0.05 of its potential returns per unit of risk. BIDV Securities JSC is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 20,907,100 in BIDV Securities JSC on September 3, 2024 and sell it today you would lose (16,407,100) from holding BIDV Securities JSC or give up 78.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Microsoft vs. BIDV Securities JSC
Performance |
| Timeline |
| Microsoft |
| BIDV Securities JSC |
Microsoft and BIDV Securities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and BIDV Securities
The main advantage of trading using opposite Microsoft and BIDV Securities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, BIDV Securities 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 BIDV Securities will offset losses from the drop in BIDV Securities' 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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