Correlation Between Microsoft and RHI MAGNESITA
Can any of the company-specific risk be diversified away by investing in both Microsoft and RHI MAGNESITA 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 RHI MAGNESITA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and RHI MAGNESITA INDIA, you can compare the effects of market volatilities on Microsoft and RHI MAGNESITA 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 RHI MAGNESITA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and RHI MAGNESITA.
Diversification Opportunities for Microsoft and RHI MAGNESITA
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and RHI is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and RHI MAGNESITA INDIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RHI MAGNESITA INDIA 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 RHI MAGNESITA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RHI MAGNESITA INDIA has no effect on the direction of Microsoft i.e., Microsoft and RHI MAGNESITA go up and down completely randomly.
Pair Corralation between Microsoft and RHI MAGNESITA
Given the investment horizon of 90 days Microsoft is expected to generate 0.7 times more return on investment than RHI MAGNESITA. However, Microsoft is 1.42 times less risky than RHI MAGNESITA. It trades about 0.15 of its potential returns per unit of risk. RHI MAGNESITA INDIA is currently generating about -0.08 per unit of risk. If you would invest 41,794 in Microsoft on September 20, 2024 and sell it today you would earn a total of 3,652 from holding Microsoft or generate 8.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. RHI MAGNESITA INDIA
Performance |
| Timeline |
| Microsoft |
| RHI MAGNESITA INDIA |
Microsoft and RHI MAGNESITA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and RHI MAGNESITA
The main advantage of trading using opposite Microsoft and RHI MAGNESITA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, RHI MAGNESITA 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 RHI MAGNESITA will offset losses from the drop in RHI MAGNESITA's long position.| Microsoft vs. Global Blue Group | Microsoft vs. Aurora Mobile | Microsoft vs. Marqeta | Microsoft vs. Nextnav Acquisition Corp |
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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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