Correlation Between Microsoft and Haiphong Packing

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

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

Diversification Opportunities for Microsoft and Haiphong Packing

0.04

Correlation Coefficient

Microsoft  Haiphong Packing

Significant diversification

The 3 months correlation between Microsoft and Haiphong is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Haiphong Packing VICEM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haiphong Packing VICEM 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 Haiphong Packing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haiphong Packing VICEM has no effect on the direction of Microsoft i.e., Microsoft and Haiphong Packing go up and down completely randomly.

Pair Corralation between Microsoft and Haiphong Packing

Given the investment horizon of 90 days Microsoft is expected to generate 40.32 times less return on investment than Haiphong Packing. But when comparing it to its historical volatility, Microsoft is 4.55 times less risky than Haiphong Packing. It trades about 0.01 of its potential returns per unit of risk. Haiphong Packing VICEM is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,380,000  in Haiphong Packing VICEM on September 29, 2024 and sell it today you would earn a total of  130,000  from holding Haiphong Packing VICEM or generate 9.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	41.27%
Values	Daily Returns

Microsoft  vs.  Haiphong Packing VICEM

Microsoft

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Microsoft has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Microsoft is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Haiphong Packing VICEM

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Haiphong Packing VICEM are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical indicators, Haiphong Packing displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Microsoft and Haiphong Packing

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

The idea behind Microsoft and Haiphong Packing VICEM 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.

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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .