Correlation Between Microsoft and Condor Resources

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

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

Diversification Opportunities for Microsoft and Condor Resources

-0.14

Correlation Coefficient

Microsoft  Condor Resources

Good diversification

The 3 months correlation between Microsoft and Condor is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Condor Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Condor Resources 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 Condor Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Condor Resources has no effect on the direction of Microsoft i.e., Microsoft and Condor Resources go up and down completely randomly.

Pair Corralation between Microsoft and Condor Resources

Given the investment horizon of 90 days Microsoft is expected to under-perform the Condor Resources. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 2.82 times less risky than Condor Resources. The stock trades about -0.33 of its potential returns per unit of risk. The Condor Resources is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  9.00  in Condor Resources on November 29, 2024 and sell it today you would earn a total of  0.40  from holding Condor Resources or generate 4.44% return on investment over 90 days.

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

Microsoft  vs.  Condor Resources

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.

Condor Resources

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Condor Resources are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward indicators, Condor Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Microsoft and Condor Resources

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

The idea behind Microsoft and Condor Resources 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.

Check out your portfolio center.

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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..