Correlation Between ASTRA INTERNATIONAL and Microsoft

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

By analyzing existing cross correlation between ASTRA INTERNATIONAL and Microsoft, you can compare the effects of market volatilities on ASTRA INTERNATIONAL 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 ASTRA INTERNATIONAL with a short position of Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASTRA INTERNATIONAL and Microsoft.

Diversification Opportunities for ASTRA INTERNATIONAL and Microsoft

0.02

Correlation Coefficient

ASTRA INTERNATIONAL  Microsoft

Significant diversification

The 3 months correlation between ASTRA and Microsoft is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding ASTRA INTERNATIONAL and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft and ASTRA INTERNATIONAL 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 ASTRA INTERNATIONAL 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 ASTRA INTERNATIONAL i.e., ASTRA INTERNATIONAL and Microsoft go up and down completely randomly.

Pair Corralation between ASTRA INTERNATIONAL and Microsoft

Assuming the 90 days trading horizon ASTRA INTERNATIONAL is expected to generate 1.59 times more return on investment than Microsoft. However, ASTRA INTERNATIONAL is 1.59 times more volatile than Microsoft. It trades about 0.05 of its potential returns per unit of risk. Microsoft is currently generating about -0.01 per unit of risk. If you would invest  25.00  in ASTRA INTERNATIONAL on September 29, 2024 and sell it today you would earn a total of  3.00  from holding ASTRA INTERNATIONAL or generate 12.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.22%
Values	Daily Returns

ASTRA INTERNATIONAL  vs.  Microsoft

ASTRA INTERNATIONAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ASTRA INTERNATIONAL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, ASTRA INTERNATIONAL is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Microsoft

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, Microsoft may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with ASTRA INTERNATIONAL and Microsoft

The main advantage of trading using opposite ASTRA INTERNATIONAL and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASTRA INTERNATIONAL 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.

The idea behind ASTRA INTERNATIONAL and Microsoft 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..