Correlation Between Microsoft and Thanh Dat
Can any of the company-specific risk be diversified away by investing in both Microsoft and Thanh Dat 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 Thanh Dat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Thanh Dat Investment, you can compare the effects of market volatilities on Microsoft and Thanh Dat 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 Thanh Dat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Thanh Dat.
Diversification Opportunities for Microsoft and Thanh Dat
Good diversification
The 3 months correlation between Microsoft and Thanh is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Thanh Dat Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thanh Dat Investment 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 Thanh Dat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thanh Dat Investment has no effect on the direction of Microsoft i.e., Microsoft and Thanh Dat go up and down completely randomly.
Pair Corralation between Microsoft and Thanh Dat
Given the investment horizon of 90 days Microsoft is expected to under-perform the Thanh Dat. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 1.57 times less risky than Thanh Dat. The stock trades about 0.0 of its potential returns per unit of risk. The Thanh Dat Investment is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,470,000 in Thanh Dat Investment on August 29, 2024 and sell it today you would earn a total of 110,000 from holding Thanh Dat Investment or generate 4.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Microsoft vs. Thanh Dat Investment
Performance |
| Timeline |
| Microsoft |
| Thanh Dat Investment |
Microsoft and Thanh Dat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Thanh Dat
The main advantage of trading using opposite Microsoft and Thanh Dat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Thanh Dat 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 Thanh Dat will offset losses from the drop in Thanh Dat'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 Stocks Directory module to find actively traded stocks across global markets.
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