Correlation Between Microsoft and CapitaLand Integrated
Can any of the company-specific risk be diversified away by investing in both Microsoft and CapitaLand Integrated 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 CapitaLand Integrated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and CapitaLand Integrated Commercial, you can compare the effects of market volatilities on Microsoft and CapitaLand Integrated 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 CapitaLand Integrated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and CapitaLand Integrated.
Diversification Opportunities for Microsoft and CapitaLand Integrated
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and CapitaLand is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and CapitaLand Integrated Commerci in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CapitaLand Integrated 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 CapitaLand Integrated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CapitaLand Integrated has no effect on the direction of Microsoft i.e., Microsoft and CapitaLand Integrated go up and down completely randomly.
Pair Corralation between Microsoft and CapitaLand Integrated
Given the investment horizon of 90 days Microsoft is expected to under-perform the CapitaLand Integrated. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 3.23 times less risky than CapitaLand Integrated. The stock trades about -0.07 of its potential returns per unit of risk. The CapitaLand Integrated Commercial is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 130.00 in CapitaLand Integrated Commercial on October 22, 2024 and sell it today you would earn a total of 19.00 from holding CapitaLand Integrated Commercial or generate 14.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Microsoft vs. CapitaLand Integrated Commerci
Performance |
| Timeline |
| Microsoft |
| CapitaLand Integrated |
Microsoft and CapitaLand Integrated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and CapitaLand Integrated
The main advantage of trading using opposite Microsoft and CapitaLand Integrated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, CapitaLand Integrated 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 CapitaLand Integrated will offset losses from the drop in CapitaLand Integrated's 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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