Correlation Between MICRODATA and SONASID

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

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

Diversification Opportunities for MICRODATA and SONASID

-0.25

Correlation Coefficient

MICRODATA  SONASID

Very good diversification

The 3 months correlation between MICRODATA and SONASID is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding MICRODATA and SONASID in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SONASID and MICRODATA 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 MICRODATA are associated (or correlated) with SONASID. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SONASID has no effect on the direction of MICRODATA i.e., MICRODATA and SONASID go up and down completely randomly.

Pair Corralation between MICRODATA and SONASID

Assuming the 90 days trading horizon MICRODATA is expected to under-perform the SONASID. But the stock apears to be less risky and, when comparing its historical volatility, MICRODATA is 1.51 times less risky than SONASID. The stock trades about -0.01 of its potential returns per unit of risk. The SONASID is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  83,990  in SONASID on October 10, 2024 and sell it today you would earn a total of  34,010  from holding SONASID or generate 40.49% return on investment over 90 days.

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

MICRODATA  vs.  SONASID

MICRODATA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MICRODATA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, MICRODATA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

SONASID

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SONASID are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, SONASID exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MICRODATA and SONASID

The main advantage of trading using opposite MICRODATA and SONASID positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MICRODATA position performs unexpectedly, SONASID 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 SONASID will offset losses from the drop in SONASID's long position.

The idea behind MICRODATA and SONASID 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.