Correlation Between Microsoft and PT Mulia
Can any of the company-specific risk be diversified away by investing in both Microsoft and PT Mulia 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 PT Mulia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and PT Mulia Industrindo, you can compare the effects of market volatilities on Microsoft and PT Mulia 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 PT Mulia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and PT Mulia.
Diversification Opportunities for Microsoft and PT Mulia
Significant diversification
The 3 months correlation between Microsoft and MLIA is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and PT Mulia Industrindo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Mulia Industrindo 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 PT Mulia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Mulia Industrindo has no effect on the direction of Microsoft i.e., Microsoft and PT Mulia go up and down completely randomly.
Pair Corralation between Microsoft and PT Mulia
Given the investment horizon of 90 days Microsoft is expected to generate 2.09 times more return on investment than PT Mulia. However, Microsoft is 2.09 times more volatile than PT Mulia Industrindo. It trades about 0.17 of its potential returns per unit of risk. PT Mulia Industrindo is currently generating about -0.45 per unit of risk. If you would invest 40,764 in Microsoft on September 3, 2024 and sell it today you would earn a total of 1,582 from holding Microsoft or generate 3.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. PT Mulia Industrindo
Performance |
| Timeline |
| Microsoft |
| PT Mulia Industrindo |
Microsoft and PT Mulia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and PT Mulia
The main advantage of trading using opposite Microsoft and PT Mulia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, PT Mulia 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 PT Mulia will offset losses from the drop in PT Mulia's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| PT Mulia vs. Intanwijaya Internasional Tbk | PT Mulia vs. Champion Pacific Indonesia | PT Mulia vs. Mitra Pinasthika Mustika | PT Mulia vs. Jakarta Int Hotels |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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