Correlation Between Microsoft and Danang Rubber
Can any of the company-specific risk be diversified away by investing in both Microsoft and Danang Rubber 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 Danang Rubber into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Danang Rubber JSC, you can compare the effects of market volatilities on Microsoft and Danang Rubber 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 Danang Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Danang Rubber.
Diversification Opportunities for Microsoft and Danang Rubber
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Microsoft and Danang is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Danang Rubber JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danang Rubber 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 Danang Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danang Rubber JSC has no effect on the direction of Microsoft i.e., Microsoft and Danang Rubber go up and down completely randomly.
Pair Corralation between Microsoft and Danang Rubber
Given the investment horizon of 90 days Microsoft is expected to under-perform the Danang Rubber. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 1.15 times less risky than Danang Rubber. The stock trades about -0.21 of its potential returns per unit of risk. The Danang Rubber JSC is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,770,000 in Danang Rubber JSC on December 1, 2024 and sell it today you would earn a total of 50,000 from holding Danang Rubber JSC or generate 1.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Microsoft vs. Danang Rubber JSC
Performance |
| Timeline |
| Microsoft |
| Danang Rubber JSC |
Microsoft and Danang Rubber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Danang Rubber
The main advantage of trading using opposite Microsoft and Danang Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Danang Rubber 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 Danang Rubber will offset losses from the drop in Danang Rubber's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings |
| Danang Rubber vs. VTC Telecommunications JSC | Danang Rubber vs. Hanoi Plastics JSC | Danang Rubber vs. Ben Thanh Rubber | Danang Rubber vs. Saigon Telecommunication Technologies |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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