Correlation Between Microsoft and HUTCHISON TELECOMM
Can any of the company-specific risk be diversified away by investing in both Microsoft and HUTCHISON TELECOMM 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 HUTCHISON TELECOMM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and HUTCHISON TELECOMM, you can compare the effects of market volatilities on Microsoft and HUTCHISON TELECOMM 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 HUTCHISON TELECOMM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and HUTCHISON TELECOMM.
Diversification Opportunities for Microsoft and HUTCHISON TELECOMM
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and HUTCHISON is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and HUTCHISON TELECOMM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUTCHISON TELECOMM 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 HUTCHISON TELECOMM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HUTCHISON TELECOMM has no effect on the direction of Microsoft i.e., Microsoft and HUTCHISON TELECOMM go up and down completely randomly.
Pair Corralation between Microsoft and HUTCHISON TELECOMM
Given the investment horizon of 90 days Microsoft is expected to generate 0.27 times more return on investment than HUTCHISON TELECOMM. However, Microsoft is 3.66 times less risky than HUTCHISON TELECOMM. It trades about 0.07 of its potential returns per unit of risk. HUTCHISON TELECOMM is currently generating about -0.05 per unit of risk. If you would invest 43,933 in Microsoft on October 25, 2024 and sell it today you would earn a total of 687.00 from holding Microsoft or generate 1.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
Microsoft vs. HUTCHISON TELECOMM
Performance |
| Timeline |
| Microsoft |
| HUTCHISON TELECOMM |
Microsoft and HUTCHISON TELECOMM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and HUTCHISON TELECOMM
The main advantage of trading using opposite Microsoft and HUTCHISON TELECOMM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, HUTCHISON TELECOMM 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 HUTCHISON TELECOMM will offset losses from the drop in HUTCHISON TELECOMM'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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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