Correlation Between Microsoft and CTT Systems
Can any of the company-specific risk be diversified away by investing in both Microsoft and CTT 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 CTT Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and CTT Systems AB, you can compare the effects of market volatilities on Microsoft and CTT 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 CTT Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and CTT Systems.
Diversification Opportunities for Microsoft and CTT Systems
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Microsoft and CTT is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and CTT Systems AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTT Systems AB 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 CTT Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTT Systems AB has no effect on the direction of Microsoft i.e., Microsoft and CTT Systems go up and down completely randomly.
Pair Corralation between Microsoft and CTT Systems
Given the investment horizon of 90 days Microsoft is expected to generate 0.85 times more return on investment than CTT Systems. However, Microsoft is 1.17 times less risky than CTT Systems. It trades about 0.02 of its potential returns per unit of risk. CTT Systems AB is currently generating about -0.03 per unit of risk. If you would invest 42,574 in Microsoft on August 28, 2024 and sell it today you would earn a total of 225.00 from holding Microsoft or generate 0.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. CTT Systems AB
Performance |
| Timeline |
| Microsoft |
| CTT Systems AB |
Microsoft and CTT Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and CTT Systems
The main advantage of trading using opposite Microsoft and CTT Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, CTT 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 CTT Systems will offset losses from the drop in CTT Systems' long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Paysafe |
| CTT Systems vs. aXichem AB | CTT Systems vs. Gaming Corps AB | CTT Systems vs. Cantargia AB | CTT Systems vs. KABE Group 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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