Correlation Between Microsoft and PT Perusahaan
Can any of the company-specific risk be diversified away by investing in both Microsoft and PT Perusahaan 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 Perusahaan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and PT Perusahaan Gas, you can compare the effects of market volatilities on Microsoft and PT Perusahaan 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 Perusahaan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and PT Perusahaan.
Diversification Opportunities for Microsoft and PT Perusahaan
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Microsoft and PPAAF is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and PT Perusahaan Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Perusahaan Gas 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 Perusahaan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Perusahaan Gas has no effect on the direction of Microsoft i.e., Microsoft and PT Perusahaan go up and down completely randomly.
Pair Corralation between Microsoft and PT Perusahaan
Given the investment horizon of 90 days Microsoft is expected to generate 0.02 times more return on investment than PT Perusahaan. However, Microsoft is 55.41 times less risky than PT Perusahaan. It trades about 0.08 of its potential returns per unit of risk. PT Perusahaan Gas is currently generating about -0.08 per unit of risk. If you would invest 25,277 in Microsoft on September 3, 2024 and sell it today you would earn a total of 17,069 from holding Microsoft or generate 67.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 32.32% |
| Values | Daily Returns |
Microsoft vs. PT Perusahaan Gas
Performance |
| Timeline |
| Microsoft |
| PT Perusahaan Gas |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Microsoft and PT Perusahaan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and PT Perusahaan
The main advantage of trading using opposite Microsoft and PT Perusahaan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, PT Perusahaan 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 Perusahaan will offset losses from the drop in PT Perusahaan's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| PT Perusahaan vs. ENN Energy Holdings | PT Perusahaan vs. APA Group | PT Perusahaan vs. EverGen Infrastructure Corp | PT Perusahaan vs. Beijing Gas Blue |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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