Correlation Between Life Healthcare and Microsoft
Can any of the company-specific risk be diversified away by investing in both Life Healthcare and Microsoft 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 Life Healthcare and Microsoft into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Life Healthcare Group and Microsoft, you can compare the effects of market volatilities on Life Healthcare and Microsoft 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 Life Healthcare with a short position of Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of Life Healthcare and Microsoft.
Diversification Opportunities for Life Healthcare and Microsoft
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Life and Microsoft is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Life Healthcare Group and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft and Life Healthcare 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 Life Healthcare Group are associated (or correlated) with Microsoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft has no effect on the direction of Life Healthcare i.e., Life Healthcare and Microsoft go up and down completely randomly.
Pair Corralation between Life Healthcare and Microsoft
Assuming the 90 days trading horizon Life Healthcare Group is expected to generate 3.76 times more return on investment than Microsoft. However, Life Healthcare is 3.76 times more volatile than Microsoft. It trades about 0.08 of its potential returns per unit of risk. Microsoft is currently generating about -0.03 per unit of risk. If you would invest 52.00 in Life Healthcare Group on August 14, 2025 and sell it today you would earn a total of 9.00 from holding Life Healthcare Group or generate 17.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Life Healthcare Group vs. Microsoft
Performance |
| Timeline |
| Life Healthcare Group |
| Microsoft |
Life Healthcare and Microsoft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Life Healthcare and Microsoft
The main advantage of trading using opposite Life Healthcare and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Life Healthcare position performs unexpectedly, Microsoft 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 Microsoft will offset losses from the drop in Microsoft's long position.| Life Healthcare vs. Apple Inc | Life Healthcare vs. Apple Inc | Life Healthcare vs. Apple Inc | Life Healthcare vs. Apple Inc |
| Microsoft vs. MAANSHAN IRON H | Microsoft vs. RYMAN HEALTHCAR | Microsoft vs. CeoTronics AG | Microsoft vs. Life Healthcare Group |
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 CEOs Directory module to screen CEOs from public companies around the world.
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