Correlation Between Microsoft and Asiabest Group

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

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

Diversification Opportunities for Microsoft and Asiabest Group

0.42

Correlation Coefficient

Microsoft  Asiabest Group

Very weak diversification

The 3 months correlation between Microsoft and Asiabest is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Asiabest Group International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asiabest Group Inter 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 Asiabest Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asiabest Group Inter has no effect on the direction of Microsoft i.e., Microsoft and Asiabest Group go up and down completely randomly.

Pair Corralation between Microsoft and Asiabest Group

Given the investment horizon of 90 days Microsoft is expected to generate 11.87 times less return on investment than Asiabest Group. But when comparing it to its historical volatility, Microsoft is 6.61 times less risky than Asiabest Group. It trades about 0.09 of its potential returns per unit of risk. Asiabest Group International is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  360.00  in Asiabest Group International on October 12, 2024 and sell it today you would earn a total of  2,260  from holding Asiabest Group International or generate 627.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	36.57%
Values	Daily Returns

Microsoft  vs.  Asiabest Group International

Microsoft

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 1 (%) 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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

Asiabest Group Inter

Risk-Adjusted Performance

0 of 100

Excellent

Over the last 90 days Asiabest Group International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather uncertain technical and fundamental indicators, Asiabest Group exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Microsoft and Asiabest Group

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

The idea behind Microsoft and Asiabest Group International 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.