Correlation Between Microsoft and GigaCloud Technology
Can any of the company-specific risk be diversified away by investing in both Microsoft and GigaCloud Technology 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 GigaCloud Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and GigaCloud Technology Class, you can compare the effects of market volatilities on Microsoft and GigaCloud Technology 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 GigaCloud Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and GigaCloud Technology.
Diversification Opportunities for Microsoft and GigaCloud Technology
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and GigaCloud is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and GigaCloud Technology Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaCloud Technology 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 GigaCloud Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GigaCloud Technology has no effect on the direction of Microsoft i.e., Microsoft and GigaCloud Technology go up and down completely randomly.
Pair Corralation between Microsoft and GigaCloud Technology
Given the investment horizon of 90 days Microsoft is expected to under-perform the GigaCloud Technology. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 3.55 times less risky than GigaCloud Technology. The stock trades about -0.07 of its potential returns per unit of risk. The GigaCloud Technology Class is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 1,818 in GigaCloud Technology Class on October 24, 2024 and sell it today you would earn a total of 274.00 from holding GigaCloud Technology Class or generate 15.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Microsoft vs. GigaCloud Technology Class
Performance |
| Timeline |
| Microsoft |
| GigaCloud Technology |
Microsoft and GigaCloud Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and GigaCloud Technology
The main advantage of trading using opposite Microsoft and GigaCloud Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, GigaCloud Technology 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 GigaCloud Technology will offset losses from the drop in GigaCloud Technology's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. BLOCK INC | Microsoft vs. Adobe Systems Incorporated |
| GigaCloud Technology vs. Arqit Quantum | GigaCloud Technology vs. Telos Corp | GigaCloud Technology vs. Cemtrex | GigaCloud Technology vs. Alarum 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |