Correlation Between Microsoft and Bewhere Holdings

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

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

Diversification Opportunities for Microsoft and Bewhere Holdings

-0.23

Correlation Coefficient

Microsoft  Bewhere Holdings

Very good diversification

The 3 months correlation between Microsoft and Bewhere is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Bewhere Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bewhere 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 Bewhere Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bewhere Holdings has no effect on the direction of Microsoft i.e., Microsoft and Bewhere Holdings go up and down completely randomly.

Pair Corralation between Microsoft and Bewhere Holdings

Given the investment horizon of 90 days Microsoft is expected to generate 42.58 times less return on investment than Bewhere Holdings. But when comparing it to its historical volatility, Microsoft is 3.47 times less risky than Bewhere Holdings. It trades about 0.01 of its potential returns per unit of risk. Bewhere Holdings is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  40.00  in Bewhere Holdings on September 3, 2024 and sell it today you would earn a total of  29.00  from holding Bewhere Holdings or generate 72.5% return on investment over 90 days.

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

Microsoft  vs.  Bewhere Holdings

Microsoft

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 3 (%) 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.

Bewhere Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bewhere Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Bewhere Holdings is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Microsoft and Bewhere Holdings

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

The idea behind Microsoft and Bewhere 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.