Correlation Between Microsoft and KEPPEL CORP
Can any of the company-specific risk be diversified away by investing in both Microsoft and KEPPEL CORP 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 KEPPEL CORP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and KEPPEL P , you can compare the effects of market volatilities on Microsoft and KEPPEL CORP 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 KEPPEL CORP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and KEPPEL CORP.
Diversification Opportunities for Microsoft and KEPPEL CORP
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Microsoft and KEPPEL is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and KEPPEL P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KEPPEL CORP 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 KEPPEL CORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KEPPEL CORP has no effect on the direction of Microsoft i.e., Microsoft and KEPPEL CORP go up and down completely randomly.
Pair Corralation between Microsoft and KEPPEL CORP
Given the investment horizon of 90 days Microsoft is expected to under-perform the KEPPEL CORP. In addition to that, Microsoft is 1.87 times more volatile than KEPPEL P . It trades about -0.04 of its total potential returns per unit of risk. KEPPEL P is currently generating about 0.22 per unit of volatility. If you would invest 451.00 in KEPPEL P on August 28, 2024 and sell it today you would earn a total of 19.00 from holding KEPPEL P or generate 4.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. KEPPEL P
Performance |
| Timeline |
| Microsoft |
| KEPPEL CORP |
Microsoft and KEPPEL CORP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and KEPPEL CORP
The main advantage of trading using opposite Microsoft and KEPPEL CORP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, KEPPEL CORP 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 KEPPEL CORP will offset losses from the drop in KEPPEL CORP's long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Paysafe |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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