Correlation Between Microsoft Corp and Aptose Biosciences

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

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

Diversification Opportunities for Microsoft Corp and Aptose Biosciences

-0.79

Correlation Coefficient

Microsoft Corp  Aptose Biosciences

Pay attention - limited upside

The 3 months correlation between Microsoft and Aptose is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft Corp CDR and Aptose Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aptose Biosciences and Microsoft Corp 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 Corp CDR are associated (or correlated) with Aptose Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aptose Biosciences has no effect on the direction of Microsoft Corp i.e., Microsoft Corp and Aptose Biosciences go up and down completely randomly.

Pair Corralation between Microsoft Corp and Aptose Biosciences

Assuming the 90 days trading horizon Microsoft Corp CDR is expected to under-perform the Aptose Biosciences. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft Corp CDR is 82.43 times less risky than Aptose Biosciences. The stock trades about -0.11 of its potential returns per unit of risk. The Aptose Biosciences is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  36.00  in Aptose Biosciences on December 23, 2024 and sell it today you would earn a total of  474.00  from holding Aptose Biosciences or generate 1316.67% return on investment over 90 days.

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

Microsoft Corp CDR  vs.  Aptose Biosciences

Microsoft Corp CDR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Microsoft Corp CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Aptose Biosciences

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aptose Biosciences are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Aptose Biosciences displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Microsoft Corp and Aptose Biosciences

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

The idea behind Microsoft Corp CDR and Aptose Biosciences 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.