Correlation Between Microsoft and Abionyx Pharma

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

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

Diversification Opportunities for Microsoft and Abionyx Pharma

-0.09

Correlation Coefficient

Microsoft  Abionyx Pharma

Good diversification

The 3 months correlation between Microsoft and Abionyx is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Abionyx Pharma SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abionyx Pharma SA 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 Abionyx Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abionyx Pharma SA has no effect on the direction of Microsoft i.e., Microsoft and Abionyx Pharma go up and down completely randomly.

Pair Corralation between Microsoft and Abionyx Pharma

Given the investment horizon of 90 days Microsoft is expected to under-perform the Abionyx Pharma. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 1.72 times less risky than Abionyx Pharma. The stock trades about -0.07 of its potential returns per unit of risk. The Abionyx Pharma SA is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  121.00  in Abionyx Pharma SA on October 22, 2024 and sell it today you would earn a total of  12.00  from holding Abionyx Pharma SA or generate 9.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Microsoft  vs.  Abionyx Pharma SA

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.

Abionyx Pharma SA

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Abionyx Pharma SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Abionyx Pharma may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Microsoft and Abionyx Pharma

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

The idea behind Microsoft and Abionyx Pharma SA 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.