Correlation Between Microsoft and SemiLEDS
Can any of the company-specific risk be diversified away by investing in both Microsoft and SemiLEDS 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 SemiLEDS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and SemiLEDS, you can compare the effects of market volatilities on Microsoft and SemiLEDS 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 SemiLEDS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and SemiLEDS.
Diversification Opportunities for Microsoft and SemiLEDS
Pay attention - limited upside
The 3 months correlation between Microsoft and SemiLEDS is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and SemiLEDS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SemiLEDS 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 SemiLEDS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SemiLEDS has no effect on the direction of Microsoft i.e., Microsoft and SemiLEDS go up and down completely randomly.
Pair Corralation between Microsoft and SemiLEDS
Given the investment horizon of 90 days Microsoft is expected to generate 0.19 times more return on investment than SemiLEDS. However, Microsoft is 5.18 times less risky than SemiLEDS. It trades about 0.17 of its potential returns per unit of risk. SemiLEDS is currently generating about -0.09 per unit of risk. If you would invest 45,993 in Microsoft on May 25, 2025 and sell it today you would earn a total of 4,730 from holding Microsoft or generate 10.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. SemiLEDS
Performance |
| Timeline |
| Microsoft |
| SemiLEDS |
Microsoft and SemiLEDS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and SemiLEDS
The main advantage of trading using opposite Microsoft and SemiLEDS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, SemiLEDS 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 SemiLEDS will offset losses from the drop in SemiLEDS's long position.| Microsoft vs. Palantir Technologies Class | Microsoft vs. Crowdstrike Holdings | Microsoft vs. Oracle | Microsoft vs. CoreWeave, Class A |
| SemiLEDS vs. Nano Labs | SemiLEDS vs. ChipMOS Technologies | SemiLEDS vs. Wisekey International Holding | SemiLEDS vs. Silicon Motion Technology |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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