Correlation Between Microsoft and MQ Technology

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

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

Diversification Opportunities for Microsoft and MQ Technology

-0.65

Correlation Coefficient

Microsoft  MQ Technology

Excellent diversification

The 3 months correlation between Microsoft and 0070 is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and MQ Technology Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MQ Technology Bhd 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 MQ Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MQ Technology Bhd has no effect on the direction of Microsoft i.e., Microsoft and MQ Technology go up and down completely randomly.

Pair Corralation between Microsoft and MQ Technology

Given the investment horizon of 90 days Microsoft is expected to generate 0.2 times more return on investment than MQ Technology. However, Microsoft is 5.0 times less risky than MQ Technology. It trades about 0.0 of its potential returns per unit of risk. MQ Technology Bhd is currently generating about -0.05 per unit of risk. If you would invest  43,098  in Microsoft on October 1, 2024 and sell it today you would lose (45.00) from holding Microsoft or give up 0.1% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Microsoft  vs.  MQ Technology Bhd

Microsoft

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Microsoft is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

MQ Technology Bhd

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MQ Technology Bhd are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, MQ Technology may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Microsoft and MQ Technology

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

The idea behind Microsoft and MQ Technology Bhd 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.