Correlation Between Microsoft and Hollysys Automation
Can any of the company-specific risk be diversified away by investing in both Microsoft and Hollysys Automation 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 Hollysys Automation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Hollysys Automation Technologies, you can compare the effects of market volatilities on Microsoft and Hollysys Automation 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 Hollysys Automation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Hollysys Automation.
Diversification Opportunities for Microsoft and Hollysys Automation
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and Hollysys is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Hollysys Automation Technologi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hollysys Automation 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 Hollysys Automation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hollysys Automation has no effect on the direction of Microsoft i.e., Microsoft and Hollysys Automation go up and down completely randomly.
Pair Corralation between Microsoft and Hollysys Automation
Given the investment horizon of 90 days Microsoft is expected to generate 0.76 times more return on investment than Hollysys Automation. However, Microsoft is 1.32 times less risky than Hollysys Automation. It trades about 0.1 of its potential returns per unit of risk. Hollysys Automation Technologies is currently generating about 0.07 per unit of risk. If you would invest 22,345 in Microsoft on August 31, 2024 and sell it today you would earn a total of 20,001 from holding Microsoft or generate 89.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 81.38% |
| Values | Daily Returns |
Microsoft vs. Hollysys Automation Technologi
Performance |
| Timeline |
| Microsoft |
| Hollysys Automation |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Microsoft and Hollysys Automation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Hollysys Automation
The main advantage of trading using opposite Microsoft and Hollysys Automation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Hollysys Automation 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 Hollysys Automation will offset losses from the drop in Hollysys Automation's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Hollysys Automation vs. Huazhu Group | Hollysys Automation vs. VNET Group DRC | Hollysys Automation vs. Noah Holdings |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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