Correlation Between Microsoft and Matahari Putra
Can any of the company-specific risk be diversified away by investing in both Microsoft and Matahari Putra 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 Matahari Putra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Matahari Putra Prima, you can compare the effects of market volatilities on Microsoft and Matahari Putra 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 Matahari Putra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Matahari Putra.
Diversification Opportunities for Microsoft and Matahari Putra
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Microsoft and Matahari is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Matahari Putra Prima in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matahari Putra Prima 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 Matahari Putra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matahari Putra Prima has no effect on the direction of Microsoft i.e., Microsoft and Matahari Putra go up and down completely randomly.
Pair Corralation between Microsoft and Matahari Putra
Given the investment horizon of 90 days Microsoft is expected to generate 0.3 times more return on investment than Matahari Putra. However, Microsoft is 3.29 times less risky than Matahari Putra. It trades about 0.06 of its potential returns per unit of risk. Matahari Putra Prima is currently generating about 0.01 per unit of risk. If you would invest 32,151 in Microsoft on August 31, 2024 and sell it today you would earn a total of 10,195 from holding Microsoft or generate 31.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.99% |
| Values | Daily Returns |
Microsoft vs. Matahari Putra Prima
Performance |
| Timeline |
| Microsoft |
| Matahari Putra Prima |
Microsoft and Matahari Putra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Matahari Putra
The main advantage of trading using opposite Microsoft and Matahari Putra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Matahari Putra 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 Matahari Putra will offset losses from the drop in Matahari Putra'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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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