Correlation Between Microsoft and Sino AG
Can any of the company-specific risk be diversified away by investing in both Microsoft and Sino AG 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 Sino AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Sino AG, you can compare the effects of market volatilities on Microsoft and Sino AG 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 Sino AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Sino AG.
Diversification Opportunities for Microsoft and Sino AG
Good diversification
The 3 months correlation between Microsoft and Sino is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Sino AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sino AG 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 Sino AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sino AG has no effect on the direction of Microsoft i.e., Microsoft and Sino AG go up and down completely randomly.
Pair Corralation between Microsoft and Sino AG
Given the investment horizon of 90 days Microsoft is expected to generate 1.84 times less return on investment than Sino AG. But when comparing it to its historical volatility, Microsoft is 1.59 times less risky than Sino AG. It trades about 0.08 of its potential returns per unit of risk. Sino AG is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,405 in Sino AG on September 2, 2024 and sell it today you would earn a total of 3,945 from holding Sino AG or generate 164.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.22% |
| Values | Daily Returns |
Microsoft vs. Sino AG
Performance |
| Timeline |
| Microsoft |
| Sino AG |
Microsoft and Sino AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Sino AG
The main advantage of trading using opposite Microsoft and Sino AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Sino AG 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 Sino AG will offset losses from the drop in Sino AG's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Sino AG vs. Morgan Stanley | Sino AG vs. The Goldman Sachs | Sino AG vs. Superior Plus Corp | Sino AG vs. NMI Holdings |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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