Correlation Between Microsoft and Fubon NIFTY

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

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

Diversification Opportunities for Microsoft and Fubon NIFTY

0.61

Correlation Coefficient

Microsoft  Fubon NIFTY

Poor diversification

The 3 months correlation between Microsoft and Fubon is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Fubon NIFTY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fubon NIFTY 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 Fubon NIFTY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fubon NIFTY has no effect on the direction of Microsoft i.e., Microsoft and Fubon NIFTY go up and down completely randomly.

Pair Corralation between Microsoft and Fubon NIFTY

Given the investment horizon of 90 days Microsoft is expected to under-perform the Fubon NIFTY. In addition to that, Microsoft is 2.12 times more volatile than Fubon NIFTY. It trades about -0.11 of its total potential returns per unit of risk. Fubon NIFTY is currently generating about -0.01 per unit of volatility. If you would invest  3,757  in Fubon NIFTY on December 29, 2024 and sell it today you would lose (26.00) from holding Fubon NIFTY or give up 0.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	91.8%
Values	Daily Returns

Microsoft  vs.  Fubon NIFTY

Microsoft

Risk-Adjusted Performance

Very Weak

Over the last 90 days Microsoft 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 stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Fubon NIFTY

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fubon NIFTY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Fubon NIFTY 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 Fubon NIFTY

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

The idea behind Microsoft and Fubon NIFTY 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.