Correlation Between Microsoft and VinFast Auto
Can any of the company-specific risk be diversified away by investing in both Microsoft and VinFast Auto 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 VinFast Auto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and VinFast Auto Ltd, you can compare the effects of market volatilities on Microsoft and VinFast Auto 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 VinFast Auto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and VinFast Auto.
Diversification Opportunities for Microsoft and VinFast Auto
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and VinFast is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and VinFast Auto Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VinFast Auto 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 VinFast Auto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VinFast Auto has no effect on the direction of Microsoft i.e., Microsoft and VinFast Auto go up and down completely randomly.
Pair Corralation between Microsoft and VinFast Auto
Given the investment horizon of 90 days Microsoft is expected to generate 0.15 times more return on investment than VinFast Auto. However, Microsoft is 6.53 times less risky than VinFast Auto. It trades about 0.09 of its potential returns per unit of risk. VinFast Auto Ltd is currently generating about -0.03 per unit of risk. If you would invest 31,595 in Microsoft on August 29, 2024 and sell it today you would earn a total of 10,704 from holding Microsoft or generate 33.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. VinFast Auto Ltd
Performance |
| Timeline |
| Microsoft |
| VinFast Auto |
Microsoft and VinFast Auto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and VinFast Auto
The main advantage of trading using opposite Microsoft and VinFast Auto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, VinFast Auto 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 VinFast Auto will offset losses from the drop in VinFast Auto's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| VinFast Auto vs. NETGEAR | VinFast Auto vs. Zedge Inc | VinFast Auto vs. ArcelorMittal SA ADR | VinFast Auto vs. Integral Ad Science |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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