Correlation Between Sage Group and Microlise Group
Can any of the company-specific risk be diversified away by investing in both Sage Group and Microlise Group 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 Sage Group and Microlise Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sage Group PLC and Microlise Group PLC, you can compare the effects of market volatilities on Sage Group and Microlise Group 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 Sage Group with a short position of Microlise Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sage Group and Microlise Group.
Diversification Opportunities for Sage Group and Microlise Group
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Sage and Microlise is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Sage Group PLC and Microlise Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microlise Group PLC and Sage Group 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 Sage Group PLC are associated (or correlated) with Microlise Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microlise Group PLC has no effect on the direction of Sage Group i.e., Sage Group and Microlise Group go up and down completely randomly.
Pair Corralation between Sage Group and Microlise Group
Assuming the 90 days trading horizon Sage Group PLC is expected to generate 0.77 times more return on investment than Microlise Group. However, Sage Group PLC is 1.3 times less risky than Microlise Group. It trades about 0.16 of its potential returns per unit of risk. Microlise Group PLC is currently generating about -0.11 per unit of risk. If you would invest 101,850 in Sage Group PLC on September 23, 2024 and sell it today you would earn a total of 27,150 from holding Sage Group PLC or generate 26.66% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Sage Group PLC vs. Microlise Group PLC
Performance |
Timeline |
Sage Group PLC |
Microlise Group PLC |
Sage Group and Microlise Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sage Group and Microlise Group
The main advantage of trading using opposite Sage Group and Microlise Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sage Group position performs unexpectedly, Microlise Group 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 Microlise Group will offset losses from the drop in Microlise Group's long position.Sage Group vs. Samsung Electronics Co | Sage Group vs. Samsung Electronics Co | Sage Group vs. Hyundai Motor | Sage Group vs. Toyota Motor Corp |
Microlise Group vs. Samsung Electronics Co | Microlise Group vs. Samsung Electronics Co | Microlise Group vs. Hyundai Motor | Microlise Group vs. Toyota Motor Corp |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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