Correlation Between Microsoft and AMPD Ventures

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

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

Diversification Opportunities for Microsoft and AMPD Ventures

0.0

Correlation Coefficient

Microsoft  AMPD Ventures

Pay attention - limited upside

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

Pair Corralation between Microsoft and AMPD Ventures

Given the investment horizon of 90 days Microsoft is expected to generate 21.07 times less return on investment than AMPD Ventures. But when comparing it to its historical volatility, Microsoft is 16.71 times less risky than AMPD Ventures. It trades about 0.07 of its potential returns per unit of risk. AMPD Ventures is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  0.15  in AMPD Ventures on September 13, 2024 and sell it today you would earn a total of  0.15  from holding AMPD Ventures or generate 100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Microsoft  vs.  AMPD Ventures

Microsoft

Risk-Adjusted Performance

4 of 100

Modest

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.

AMPD Ventures

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AMPD Ventures has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, AMPD Ventures 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 AMPD Ventures

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

The idea behind Microsoft and AMPD Ventures 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.