Correlation Between Microsoft and Thai Rubber
Can any of the company-specific risk be diversified away by investing in both Microsoft and Thai Rubber 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 Thai Rubber into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Thai Rubber Latex, you can compare the effects of market volatilities on Microsoft and Thai Rubber 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 Thai Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Thai Rubber.
Diversification Opportunities for Microsoft and Thai Rubber
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Microsoft and Thai is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Thai Rubber Latex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Rubber Latex 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 Thai Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Rubber Latex has no effect on the direction of Microsoft i.e., Microsoft and Thai Rubber go up and down completely randomly.
Pair Corralation between Microsoft and Thai Rubber
Given the investment horizon of 90 days Microsoft is expected to generate 0.77 times more return on investment than Thai Rubber. However, Microsoft is 1.29 times less risky than Thai Rubber. It trades about 0.0 of its potential returns per unit of risk. Thai Rubber Latex is currently generating about -0.29 per unit of risk. If you would invest 42,574 in Microsoft on August 29, 2024 and sell it today you would lose (188.00) from holding Microsoft or give up 0.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Microsoft vs. Thai Rubber Latex
Performance |
| Timeline |
| Microsoft |
| Thai Rubber Latex |
Microsoft and Thai Rubber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Thai Rubber
The main advantage of trading using opposite Microsoft and Thai Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Thai Rubber 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 Thai Rubber will offset losses from the drop in Thai Rubber's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Thai Rubber vs. Thoresen Thai Agencies | Thai Rubber vs. Sri Trang Agro Industry | Thai Rubber vs. TPI Polene Public | Thai Rubber vs. Ratchthani Leasing Public |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |