Correlation Between Microsoft Corp and Guru Organic

Can any of the company-specific risk be diversified away by investing in both Microsoft Corp and Guru Organic 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 Guru Organic 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 Guru Organic Energy, you can compare the effects of market volatilities on Microsoft Corp and Guru Organic 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 Guru Organic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft Corp and Guru Organic.

Diversification Opportunities for Microsoft Corp and Guru Organic

-0.17

Correlation Coefficient

Microsoft Corp  Guru Organic

Good diversification

The 3 months correlation between Microsoft and Guru is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft Corp CDR and Guru Organic Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guru Organic Energy 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 Guru Organic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guru Organic Energy has no effect on the direction of Microsoft Corp i.e., Microsoft Corp and Guru Organic go up and down completely randomly.

Pair Corralation between Microsoft Corp and Guru Organic

Assuming the 90 days trading horizon Microsoft Corp CDR is expected to generate 0.41 times more return on investment than Guru Organic. However, Microsoft Corp CDR is 2.44 times less risky than Guru Organic. It trades about -0.06 of its potential returns per unit of risk. Guru Organic Energy is currently generating about -0.09 per unit of risk. If you would invest  3,427  in Microsoft Corp CDR on October 3, 2024 and sell it today you would lose (348.00) from holding Microsoft Corp CDR or give up 10.15% of portfolio value over 90 days.

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

Microsoft Corp CDR  vs.  Guru Organic Energy

Microsoft Corp CDR

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft Corp CDR are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Microsoft Corp is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Guru Organic Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guru Organic Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Microsoft Corp and Guru Organic

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

The idea behind Microsoft Corp CDR and Guru Organic Energy 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.