Correlation Between Microsoft and HUTCHMED
Can any of the company-specific risk be diversified away by investing in both Microsoft and HUTCHMED 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 HUTCHMED into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and HUTCHMED LS 1, you can compare the effects of market volatilities on Microsoft and HUTCHMED 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 HUTCHMED. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and HUTCHMED.
Diversification Opportunities for Microsoft and HUTCHMED
Very good diversification
The 3 months correlation between Microsoft and HUTCHMED is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and HUTCHMED LS 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUTCHMED LS 1 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 HUTCHMED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HUTCHMED LS 1 has no effect on the direction of Microsoft i.e., Microsoft and HUTCHMED go up and down completely randomly.
Pair Corralation between Microsoft and HUTCHMED
Given the investment horizon of 90 days Microsoft is expected to generate 0.36 times more return on investment than HUTCHMED. However, Microsoft is 2.8 times less risky than HUTCHMED. It trades about 0.0 of its potential returns per unit of risk. HUTCHMED LS 1 is currently generating about -0.04 per unit of risk. If you would invest 44,316 in Microsoft on September 21, 2024 and sell it today you would lose (295.00) from holding Microsoft or give up 0.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.07% |
| Values | Daily Returns |
Microsoft vs. HUTCHMED LS 1
Performance |
| Timeline |
| Microsoft |
| HUTCHMED LS 1 |
Microsoft and HUTCHMED Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and HUTCHMED
The main advantage of trading using opposite Microsoft and HUTCHMED positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, HUTCHMED 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 HUTCHMED will offset losses from the drop in HUTCHMED's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| HUTCHMED vs. Computer And Technologies | HUTCHMED vs. Casio Computer CoLtd | HUTCHMED vs. Performance Food Group | HUTCHMED vs. AECOM TECHNOLOGY |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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