Correlation Between Microsoft and TAMBANG BATUBARA-B-

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

By analyzing existing cross correlation between Microsoft and TAMBANG BATUBARA B , you can compare the effects of market volatilities on Microsoft and TAMBANG BATUBARA-B- 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 TAMBANG BATUBARA-B-. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and TAMBANG BATUBARA-B-.

Diversification Opportunities for Microsoft and TAMBANG BATUBARA-B-

0.2

Correlation Coefficient

Microsoft  TAMBANG BATUBARA-B-

Modest diversification

The 3 months correlation between Microsoft and TAMBANG is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and TAMBANG BATUBARA B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TAMBANG BATUBARA-B- 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 TAMBANG BATUBARA-B-. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TAMBANG BATUBARA-B- has no effect on the direction of Microsoft i.e., Microsoft and TAMBANG BATUBARA-B- go up and down completely randomly.

Pair Corralation between Microsoft and TAMBANG BATUBARA-B-

Assuming the 90 days trading horizon Microsoft is expected to generate 0.39 times more return on investment than TAMBANG BATUBARA-B-. However, Microsoft is 2.53 times less risky than TAMBANG BATUBARA-B-. It trades about -0.29 of its potential returns per unit of risk. TAMBANG BATUBARA B is currently generating about -0.37 per unit of risk. If you would invest  42,705  in Microsoft on October 15, 2024 and sell it today you would lose (1,520) from holding Microsoft or give up 3.56% of portfolio value over 90 days.

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

Microsoft  vs.  TAMBANG BATUBARA B

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 fragile technical and fundamental indicators, Microsoft may actually be approaching a critical reversion point that can send shares even higher in February 2025.

TAMBANG BATUBARA-B-

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TAMBANG BATUBARA B has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, TAMBANG BATUBARA-B- is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Microsoft and TAMBANG BATUBARA-B-

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

The idea behind Microsoft and TAMBANG BATUBARA B 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.

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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.