Correlation Between Microsoft and Vu Dang
Can any of the company-specific risk be diversified away by investing in both Microsoft and Vu Dang 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 Vu Dang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Vu Dang Investment, you can compare the effects of market volatilities on Microsoft and Vu Dang 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 Vu Dang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Vu Dang.
Diversification Opportunities for Microsoft and Vu Dang
Very weak diversification
The 3 months correlation between Microsoft and SVD is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Vu Dang Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vu Dang Investment 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 Vu Dang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vu Dang Investment has no effect on the direction of Microsoft i.e., Microsoft and Vu Dang go up and down completely randomly.
Pair Corralation between Microsoft and Vu Dang
Given the investment horizon of 90 days Microsoft is expected to under-perform the Vu Dang. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 1.37 times less risky than Vu Dang. The stock trades about -0.07 of its potential returns per unit of risk. The Vu Dang Investment is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 321,000 in Vu Dang Investment on November 7, 2024 and sell it today you would lose (2,000) from holding Vu Dang Investment or give up 0.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 76.19% |
| Values | Daily Returns |
Microsoft vs. Vu Dang Investment
Performance |
| Timeline |
| Microsoft |
| Vu Dang Investment |
Microsoft and Vu Dang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Vu Dang
The main advantage of trading using opposite Microsoft and Vu Dang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Vu Dang 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 Vu Dang will offset losses from the drop in Vu Dang's long position.| Microsoft vs. Crowdstrike Holdings | Microsoft vs. Okta Inc | Microsoft vs. Cloudflare | Microsoft vs. MongoDB |
| Vu Dang vs. Elcom Technology Communications | Vu Dang vs. Vietnam JSCmmercial Bank | Vu Dang vs. Hai An Transport | Vu Dang vs. Transport and Industry |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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