Correlation Between Microsoft and Braskem SA
Can any of the company-specific risk be diversified away by investing in both Microsoft and Braskem SA 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 Braskem SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Braskem SA, you can compare the effects of market volatilities on Microsoft and Braskem SA 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 Braskem SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Braskem SA.
Diversification Opportunities for Microsoft and Braskem SA
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Microsoft and Braskem is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Braskem SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Braskem SA 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 Braskem SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Braskem SA has no effect on the direction of Microsoft i.e., Microsoft and Braskem SA go up and down completely randomly.
Pair Corralation between Microsoft and Braskem SA
Assuming the 90 days trading horizon Microsoft is expected to generate 0.58 times more return on investment than Braskem SA. However, Microsoft is 1.71 times less risky than Braskem SA. It trades about 0.08 of its potential returns per unit of risk. Braskem SA is currently generating about -0.11 per unit of risk. If you would invest 8,977 in Microsoft on August 30, 2024 and sell it today you would earn a total of 1,493 from holding Microsoft or generate 16.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Braskem SA
Performance |
| Timeline |
| Microsoft |
| Braskem SA |
Microsoft and Braskem SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Braskem SA
The main advantage of trading using opposite Microsoft and Braskem SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Braskem SA 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 Braskem SA will offset losses from the drop in Braskem SA's long position.| Microsoft vs. Beyond Meat | Microsoft vs. Take Two Interactive Software | Microsoft vs. Bio Techne | Microsoft vs. Zoom Video Communications |
| Braskem SA vs. Braskem SA | Braskem SA vs. Braskem SA | Braskem SA vs. Bradespar SA | Braskem SA vs. Unipar Carbocloro SA |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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