Correlation Between Microsoft and Samhwa Paint

Can any of the company-specific risk be diversified away by investing in both Microsoft and Samhwa Paint 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 Samhwa Paint into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Microsoft and Samhwa Paint Industrial, you can compare the effects of market volatilities on Microsoft and Samhwa Paint 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 Samhwa Paint. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Samhwa Paint.

Diversification Opportunities for Microsoft and Samhwa Paint

-0.51

Correlation Coefficient

Microsoft  Samhwa Paint

Excellent diversification

The 3 months correlation between Microsoft and Samhwa is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Samhwa Paint Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samhwa Paint Industrial 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 Samhwa Paint. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samhwa Paint Industrial has no effect on the direction of Microsoft i.e., Microsoft and Samhwa Paint go up and down completely randomly.

Pair Corralation between Microsoft and Samhwa Paint

Given the investment horizon of 90 days Microsoft is expected to generate 0.51 times more return on investment than Samhwa Paint. However, Microsoft is 1.95 times less risky than Samhwa Paint. It trades about 0.06 of its potential returns per unit of risk. Samhwa Paint Industrial is currently generating about -0.05 per unit of risk. If you would invest  42,615  in Microsoft on September 12, 2024 and sell it today you would earn a total of  1,718  from holding Microsoft or generate 4.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	92.06%
Values	Daily Returns

Microsoft  vs.  Samhwa Paint Industrial

Microsoft

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Microsoft is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Samhwa Paint Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Samhwa Paint Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Microsoft and Samhwa Paint

The main advantage of trading using opposite Microsoft and Samhwa Paint positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Samhwa Paint 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 Samhwa Paint will offset losses from the drop in Samhwa Paint's long position.

The idea behind Microsoft and Samhwa Paint Industrial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.