Correlation Between Microsoft and SSH Communications
Can any of the company-specific risk be diversified away by investing in both Microsoft and SSH Communications 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 SSH Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and SSH Communications Security, you can compare the effects of market volatilities on Microsoft and SSH Communications 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 SSH Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and SSH Communications.
Diversification Opportunities for Microsoft and SSH Communications
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Microsoft and SSH is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and SSH Communications Security in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSH Communications 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 SSH Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSH Communications has no effect on the direction of Microsoft i.e., Microsoft and SSH Communications go up and down completely randomly.
Pair Corralation between Microsoft and SSH Communications
Given the investment horizon of 90 days Microsoft is expected to generate 0.47 times more return on investment than SSH Communications. However, Microsoft is 2.13 times less risky than SSH Communications. It trades about 0.09 of its potential returns per unit of risk. SSH Communications Security is currently generating about -0.03 per unit of risk. If you would invest 25,262 in Microsoft on August 27, 2024 and sell it today you would earn a total of 16,438 from holding Microsoft or generate 65.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.56% |
| Values | Daily Returns |
Microsoft vs. SSH Communications Security
Performance |
| Timeline |
| Microsoft |
| SSH Communications |
Microsoft and SSH Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and SSH Communications
The main advantage of trading using opposite Microsoft and SSH Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, SSH Communications 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 SSH Communications will offset losses from the drop in SSH Communications' long position.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Paysafe |
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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