Correlation Between Microsoft and Medigene
Can any of the company-specific risk be diversified away by investing in both Microsoft and Medigene 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 Medigene into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Medigene AG, you can compare the effects of market volatilities on Microsoft and Medigene 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 Medigene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Medigene.
Diversification Opportunities for Microsoft and Medigene
Good diversification
The 3 months correlation between Microsoft and Medigene is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Medigene AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medigene AG 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 Medigene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medigene AG has no effect on the direction of Microsoft i.e., Microsoft and Medigene go up and down completely randomly.
Pair Corralation between Microsoft and Medigene
Given the investment horizon of 90 days Microsoft is expected to generate 7.9 times less return on investment than Medigene. But when comparing it to its historical volatility, Microsoft is 7.21 times less risky than Medigene. It trades about 0.06 of its potential returns per unit of risk. Medigene AG is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 155.00 in Medigene AG on September 15, 2024 and sell it today you would earn a total of 104.00 from holding Medigene AG or generate 67.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 72.49% |
| Values | Daily Returns |
Microsoft vs. Medigene AG
Performance |
| Timeline |
| Microsoft |
| Medigene AG |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Microsoft and Medigene Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Medigene
The main advantage of trading using opposite Microsoft and Medigene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Medigene 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 Medigene will offset losses from the drop in Medigene's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Medigene vs. Northwest Biotherapeutics | Medigene vs. Geron | Medigene vs. Advanced Proteome Therapeutics | Medigene vs. Oxford BioDynamics Plc |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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