Correlation Between Microsoft and Concrete Pumping

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

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

Diversification Opportunities for Microsoft and Concrete Pumping

0.52

Correlation Coefficient

Microsoft  Concrete Pumping

Very weak diversification

The 3 months correlation between Microsoft and Concrete is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Concrete Pumping Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Concrete Pumping 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 Concrete Pumping. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Concrete Pumping Holdings has no effect on the direction of Microsoft i.e., Microsoft and Concrete Pumping go up and down completely randomly.

Pair Corralation between Microsoft and Concrete Pumping

Given the investment horizon of 90 days Microsoft is expected to under-perform the Concrete Pumping. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 2.76 times less risky than Concrete Pumping. The stock trades about -0.11 of its potential returns per unit of risk. The Concrete Pumping Holdings is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  584.00  in Concrete Pumping Holdings on December 30, 2024 and sell it today you would lose (48.00) from holding Concrete Pumping Holdings or give up 8.22% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Microsoft  vs.  Concrete Pumping 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.

Concrete Pumping Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Concrete Pumping Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, Concrete Pumping is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Microsoft and Concrete Pumping

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

The idea behind Microsoft and Concrete Pumping 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.

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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 Commodity Directory module to find actively traded commodities issued by global exchanges.