Correlation Between Microsoft and Nexam Chemical
Can any of the company-specific risk be diversified away by investing in both Microsoft and Nexam Chemical 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 Nexam Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Nexam Chemical Holding, you can compare the effects of market volatilities on Microsoft and Nexam Chemical 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 Nexam Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Nexam Chemical.
Diversification Opportunities for Microsoft and Nexam Chemical
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Microsoft and Nexam is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Nexam Chemical Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexam Chemical Holding 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 Nexam Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexam Chemical Holding has no effect on the direction of Microsoft i.e., Microsoft and Nexam Chemical go up and down completely randomly.
Pair Corralation between Microsoft and Nexam Chemical
Given the investment horizon of 90 days Microsoft is expected to generate 9.45 times less return on investment than Nexam Chemical. But when comparing it to its historical volatility, Microsoft is 2.38 times less risky than Nexam Chemical. It trades about 0.0 of its potential returns per unit of risk. Nexam Chemical Holding is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 327.00 in Nexam Chemical Holding on January 20, 2025 and sell it today you would lose (15.00) from holding Nexam Chemical Holding or give up 4.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Nexam Chemical Holding
Performance |
| Timeline |
| Microsoft |
| Nexam Chemical Holding |
Microsoft and Nexam Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Nexam Chemical
The main advantage of trading using opposite Microsoft and Nexam Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Nexam Chemical 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 Nexam Chemical will offset losses from the drop in Nexam Chemical's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings |
| Nexam Chemical vs. Polygiene AB | Nexam Chemical vs. Svenska Aerogel Holding | Nexam Chemical vs. Organoclick AB | Nexam Chemical vs. Kancera AB |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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