Correlation Between Microsoft and Brouwerij Handelsmaatschap

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

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

Diversification Opportunities for Microsoft and Brouwerij Handelsmaatschap

0.35

Correlation Coefficient

Microsoft  Brouwerij Handelsmaatschap

Weak diversification

The 3 months correlation between Microsoft and Brouwerij is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Brouwerij Handelsmaatschappij in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brouwerij Handelsmaatschap 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 Brouwerij Handelsmaatschap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brouwerij Handelsmaatschap has no effect on the direction of Microsoft i.e., Microsoft and Brouwerij Handelsmaatschap go up and down completely randomly.

Pair Corralation between Microsoft and Brouwerij Handelsmaatschap

Given the investment horizon of 90 days Microsoft is expected to under-perform the Brouwerij Handelsmaatschap. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 1.19 times less risky than Brouwerij Handelsmaatschap. The stock trades about -0.11 of its potential returns per unit of risk. The Brouwerij Handelsmaatschappij NV is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  152,000  in Brouwerij Handelsmaatschappij NV on December 30, 2024 and sell it today you would lose (14,000) from holding Brouwerij Handelsmaatschappij NV or give up 9.21% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.38%
Values	Daily Returns

Microsoft  vs.  Brouwerij Handelsmaatschappij

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.

Brouwerij Handelsmaatschap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Brouwerij Handelsmaatschappij NV has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Microsoft and Brouwerij Handelsmaatschap

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

The idea behind Microsoft and Brouwerij Handelsmaatschappij NV 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..