Correlation Between Microsoft and CeriBell,

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

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

Diversification Opportunities for Microsoft and CeriBell,

0.47

Correlation Coefficient

Microsoft  CeriBell,

Very weak diversification

The 3 months correlation between Microsoft and CeriBell, is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and CeriBell, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CeriBell, 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 CeriBell,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CeriBell, has no effect on the direction of Microsoft i.e., Microsoft and CeriBell, go up and down completely randomly.

Pair Corralation between Microsoft and CeriBell,

Given the investment horizon of 90 days Microsoft is expected to under-perform the CeriBell,. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 4.17 times less risky than CeriBell,. The stock trades about -0.03 of its potential returns per unit of risk. The CeriBell, is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,700  in CeriBell, on November 20, 2024 and sell it today you would earn a total of  444.00  from holding CeriBell, or generate 26.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	87.13%
Values	Daily Returns

Microsoft  vs.  CeriBell,

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 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.

CeriBell,

Risk-Adjusted Performance

Very Weak

Over the last 90 days CeriBell, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Microsoft and CeriBell,

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

The idea behind Microsoft and CeriBell, 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.