Correlation Between Microsoft and Primega Group
Can any of the company-specific risk be diversified away by investing in both Microsoft and Primega Group 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 Primega Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Primega Group Holdings, you can compare the effects of market volatilities on Microsoft and Primega Group 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 Primega Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Primega Group.
Diversification Opportunities for Microsoft and Primega Group
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Microsoft and Primega is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Primega Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Primega Group Holdings 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 Primega Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Primega Group Holdings has no effect on the direction of Microsoft i.e., Microsoft and Primega Group go up and down completely randomly.
Pair Corralation between Microsoft and Primega Group
Given the investment horizon of 90 days Microsoft is expected to generate 188.0 times less return on investment than Primega Group. But when comparing it to its historical volatility, Microsoft is 177.16 times less risky than Primega Group. It trades about 0.19 of its potential returns per unit of risk. Primega Group Holdings is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,434 in Primega Group Holdings on September 1, 2024 and sell it today you would lose (1,196) from holding Primega Group Holdings or give up 83.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Primega Group Holdings
Performance |
| Timeline |
| Microsoft |
| Primega Group Holdings |
Microsoft and Primega Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Primega Group
The main advantage of trading using opposite Microsoft and Primega Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Primega Group 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 Primega Group will offset losses from the drop in Primega Group's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Primega Group vs. Braskem SA Class | Primega Group vs. Mativ Holdings | Primega Group vs. Eastman Chemical | Primega Group vs. Zhihu Inc ADR |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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