Correlation Between HEXINDO ADIPERKASA and Microsoft

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

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

Diversification Opportunities for HEXINDO ADIPERKASA and Microsoft

-0.72

Correlation Coefficient

HEXINDO ADIPERKASA  Microsoft

Pay attention - limited upside

The 3 months correlation between HEXINDO and Microsoft is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding HEXINDO ADIPERKASA and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft and HEXINDO ADIPERKASA 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 HEXINDO ADIPERKASA 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 HEXINDO ADIPERKASA i.e., HEXINDO ADIPERKASA and Microsoft go up and down completely randomly.

Pair Corralation between HEXINDO ADIPERKASA and Microsoft

Assuming the 90 days trading horizon HEXINDO ADIPERKASA is expected to under-perform the Microsoft. In addition to that, HEXINDO ADIPERKASA is 1.01 times more volatile than Microsoft. It trades about -0.09 of its total potential returns per unit of risk. Microsoft is currently generating about 0.08 per unit of volatility. If you would invest  38,953  in Microsoft on September 23, 2024 and sell it today you would earn a total of  2,762  from holding Microsoft or generate 7.09% return on investment over 90 days.

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

HEXINDO ADIPERKASA  vs.  Microsoft

HEXINDO ADIPERKASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HEXINDO ADIPERKASA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Microsoft

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Microsoft may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with HEXINDO ADIPERKASA and Microsoft

The main advantage of trading using opposite HEXINDO ADIPERKASA and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HEXINDO ADIPERKASA 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 HEXINDO ADIPERKASA 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.