Correlation Between Microsoft and Tien Giang
Can any of the company-specific risk be diversified away by investing in both Microsoft and Tien Giang 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 Tien Giang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Tien Giang Investment, you can compare the effects of market volatilities on Microsoft and Tien Giang 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 Tien Giang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Tien Giang.
Diversification Opportunities for Microsoft and Tien Giang
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Microsoft and Tien is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Tien Giang Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tien Giang 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 Tien Giang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tien Giang Investment has no effect on the direction of Microsoft i.e., Microsoft and Tien Giang go up and down completely randomly.
Pair Corralation between Microsoft and Tien Giang
Given the investment horizon of 90 days Microsoft is expected to generate 0.95 times more return on investment than Tien Giang. However, Microsoft is 1.05 times less risky than Tien Giang. It trades about 0.1 of its potential returns per unit of risk. Tien Giang Investment is currently generating about 0.06 per unit of risk. If you would invest 22,130 in Microsoft on August 28, 2024 and sell it today you would earn a total of 19,749 from holding Microsoft or generate 89.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.95% |
| Values | Daily Returns |
Microsoft vs. Tien Giang Investment
Performance |
| Timeline |
| Microsoft |
| Tien Giang Investment |
Microsoft and Tien Giang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Tien Giang
The main advantage of trading using opposite Microsoft and Tien Giang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Tien Giang 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 Tien Giang will offset losses from the drop in Tien Giang's 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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