Correlation Between Microsoft and Argha Karya

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

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

Diversification Opportunities for Microsoft and Argha Karya

-0.22

Correlation Coefficient

Microsoft  Argha Karya

Very good diversification

The 3 months correlation between Microsoft and Argha is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Argha Karya Prima in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argha Karya Prima 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 Argha Karya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argha Karya Prima has no effect on the direction of Microsoft i.e., Microsoft and Argha Karya go up and down completely randomly.

Pair Corralation between Microsoft and Argha Karya

Given the investment horizon of 90 days Microsoft is expected to generate 0.3 times more return on investment than Argha Karya. However, Microsoft is 3.32 times less risky than Argha Karya. It trades about 0.06 of its potential returns per unit of risk. Argha Karya Prima is currently generating about -0.03 per unit of risk. If you would invest  42,973  in Microsoft on September 13, 2024 and sell it today you would earn a total of  1,974  from holding Microsoft or generate 4.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Microsoft  vs.  Argha Karya Prima

Microsoft

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 4 (%) 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.

Argha Karya Prima

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Argha Karya Prima has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Microsoft and Argha Karya

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

The idea behind Microsoft and Argha Karya Prima 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..