Correlation Between Microsoft and ABS-CBN Holdings

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

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

Diversification Opportunities for Microsoft and ABS-CBN Holdings

0.0

Correlation Coefficient

Microsoft  ABS-CBN Holdings

Pay attention - limited upside

The 3 months correlation between Microsoft and ABS-CBN is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and ABS CBN Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABS CBN Holdings 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 ABS-CBN Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABS CBN Holdings has no effect on the direction of Microsoft i.e., Microsoft and ABS-CBN Holdings go up and down completely randomly.

Pair Corralation between Microsoft and ABS-CBN Holdings

If you would invest  11.00  in ABS CBN Holdings on December 30, 2024 and sell it today you would earn a total of  0.00  from holding ABS CBN Holdings or generate 0.0% return on investment over 90 days.

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

Microsoft  vs.  ABS CBN Holdings

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.

ABS CBN Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days ABS CBN Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ABS-CBN Holdings 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 ABS-CBN Holdings

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

The idea behind Microsoft and ABS CBN Holdings 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.

Check out your portfolio center.

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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.