Correlation Between Microsoft and Promimic
Can any of the company-specific risk be diversified away by investing in both Microsoft and Promimic 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 Promimic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Promimic AB, you can compare the effects of market volatilities on Microsoft and Promimic 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 Promimic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Promimic.
Diversification Opportunities for Microsoft and Promimic
Significant diversification
The 3 months correlation between Microsoft and Promimic is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Promimic AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Promimic AB 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 Promimic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Promimic AB has no effect on the direction of Microsoft i.e., Microsoft and Promimic go up and down completely randomly.
Pair Corralation between Microsoft and Promimic
Given the investment horizon of 90 days Microsoft is expected to generate 1.24 times less return on investment than Promimic. But when comparing it to its historical volatility, Microsoft is 3.32 times less risky than Promimic. It trades about 0.01 of its potential returns per unit of risk. Promimic AB is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 3,180 in Promimic AB on September 3, 2024 and sell it today you would lose (280.00) from holding Promimic AB or give up 8.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.43% |
| Values | Daily Returns |
Microsoft vs. Promimic AB
Performance |
| Timeline |
| Microsoft |
| Promimic AB |
Microsoft and Promimic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Promimic
The main advantage of trading using opposite Microsoft and Promimic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Promimic 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 Promimic will offset losses from the drop in Promimic's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Promimic vs. OssDsign AB | Promimic vs. ADDvise Group AB | Promimic vs. Paxman AB | Promimic vs. MilDef Group 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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