Correlation Between Microsoft and HIGHTECH PAYMENT
Can any of the company-specific risk be diversified away by investing in both Microsoft and HIGHTECH PAYMENT 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 HIGHTECH PAYMENT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and HIGHTECH PAYMENT SYSTEMS, you can compare the effects of market volatilities on Microsoft and HIGHTECH PAYMENT 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 HIGHTECH PAYMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and HIGHTECH PAYMENT.
Diversification Opportunities for Microsoft and HIGHTECH PAYMENT
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Microsoft and HIGHTECH is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and HIGHTECH PAYMENT SYSTEMS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HIGHTECH PAYMENT SYSTEMS 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 HIGHTECH PAYMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HIGHTECH PAYMENT SYSTEMS has no effect on the direction of Microsoft i.e., Microsoft and HIGHTECH PAYMENT go up and down completely randomly.
Pair Corralation between Microsoft and HIGHTECH PAYMENT
Given the investment horizon of 90 days Microsoft is expected to generate 0.99 times more return on investment than HIGHTECH PAYMENT. However, Microsoft is 1.01 times less risky than HIGHTECH PAYMENT. It trades about 0.15 of its potential returns per unit of risk. HIGHTECH PAYMENT SYSTEMS is currently generating about -0.15 per unit of risk. If you would invest 40,955 in Microsoft on September 2, 2024 and sell it today you would earn a total of 1,391 from holding Microsoft or generate 3.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Microsoft vs. HIGHTECH PAYMENT SYSTEMS
Performance |
| Timeline |
| Microsoft |
| HIGHTECH PAYMENT SYSTEMS |
Microsoft and HIGHTECH PAYMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and HIGHTECH PAYMENT
The main advantage of trading using opposite Microsoft and HIGHTECH PAYMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, HIGHTECH PAYMENT 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 HIGHTECH PAYMENT will offset losses from the drop in HIGHTECH PAYMENT'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 Global Correlations module to find global opportunities by holding instruments from different markets.
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