Correlation Between Microsoft and Thong Nhat
Can any of the company-specific risk be diversified away by investing in both Microsoft and Thong Nhat 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 Thong Nhat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Thong Nhat Rubber, you can compare the effects of market volatilities on Microsoft and Thong Nhat 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 Thong Nhat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Thong Nhat.
Diversification Opportunities for Microsoft and Thong Nhat
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and Thong is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Thong Nhat Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thong Nhat Rubber 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 Thong Nhat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thong Nhat Rubber has no effect on the direction of Microsoft i.e., Microsoft and Thong Nhat go up and down completely randomly.
Pair Corralation between Microsoft and Thong Nhat
Given the investment horizon of 90 days Microsoft is expected to generate 0.27 times more return on investment than Thong Nhat. However, Microsoft is 3.71 times less risky than Thong Nhat. It trades about 0.19 of its potential returns per unit of risk. Thong Nhat Rubber is currently generating about 0.0 per unit of risk. If you would invest 42,483 in Microsoft on October 29, 2024 and sell it today you would earn a total of 1,923 from holding Microsoft or generate 4.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 66.67% |
| Values | Daily Returns |
Microsoft vs. Thong Nhat Rubber
Performance |
| Timeline |
| Microsoft |
| Thong Nhat Rubber |
Microsoft and Thong Nhat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Thong Nhat
The main advantage of trading using opposite Microsoft and Thong Nhat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Thong Nhat 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 Thong Nhat will offset losses from the drop in Thong Nhat's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. BLOCK INC | Microsoft vs. Adobe Systems Incorporated |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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