Correlation Between FONIX MOBILE and Microsoft

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

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

Diversification Opportunities for FONIX MOBILE and Microsoft

-0.48

Correlation Coefficient

FONIX MOBILE  Microsoft

Very good diversification

The 3 months correlation between FONIX and Microsoft is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding FONIX MOBILE PLC and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft and FONIX MOBILE 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 FONIX MOBILE PLC 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 FONIX MOBILE i.e., FONIX MOBILE and Microsoft go up and down completely randomly.

Pair Corralation between FONIX MOBILE and Microsoft

Assuming the 90 days horizon FONIX MOBILE PLC is expected to under-perform the Microsoft. In addition to that, FONIX MOBILE is 1.55 times more volatile than Microsoft. It trades about -0.39 of its total potential returns per unit of risk. Microsoft is currently generating about -0.08 per unit of volatility. If you would invest  41,845  in Microsoft on October 24, 2024 and sell it today you would lose (665.00) from holding Microsoft or give up 1.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

FONIX MOBILE PLC  vs.  Microsoft

FONIX MOBILE PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FONIX MOBILE PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Microsoft

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Microsoft is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with FONIX MOBILE and Microsoft

The main advantage of trading using opposite FONIX MOBILE and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FONIX MOBILE 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 FONIX MOBILE PLC 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.