Correlation Between Microsoft and MOBILE FACTORY

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

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

Diversification Opportunities for Microsoft and MOBILE FACTORY

-0.04

Correlation Coefficient

Microsoft  MOBILE FACTORY

Good diversification

The 3 months correlation between Microsoft and MOBILE is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and MOBILE FACTORY INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MOBILE FACTORY INC 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 MOBILE FACTORY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MOBILE FACTORY INC has no effect on the direction of Microsoft i.e., Microsoft and MOBILE FACTORY go up and down completely randomly.

Pair Corralation between Microsoft and MOBILE FACTORY

Given the investment horizon of 90 days Microsoft is expected to under-perform the MOBILE FACTORY. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 1.04 times less risky than MOBILE FACTORY. The stock trades about -0.1 of its potential returns per unit of risk. The MOBILE FACTORY INC is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  555.00  in MOBILE FACTORY INC on December 22, 2024 and sell it today you would earn a total of  10.00  from holding MOBILE FACTORY INC or generate 1.8% return on investment over 90 days.

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

Microsoft  vs.  MOBILE FACTORY INC

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.

MOBILE FACTORY INC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MOBILE FACTORY INC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, MOBILE FACTORY is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Microsoft and MOBILE FACTORY

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

The idea behind Microsoft and MOBILE FACTORY INC 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.