Correlation Between Microsoft and Catur Sentosa

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

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

Diversification Opportunities for Microsoft and Catur Sentosa

0.59

Correlation Coefficient

Microsoft  Catur Sentosa

Very weak diversification

The 3 months correlation between Microsoft and Catur is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Catur Sentosa Adiprana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catur Sentosa Adiprana 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 Catur Sentosa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catur Sentosa Adiprana has no effect on the direction of Microsoft i.e., Microsoft and Catur Sentosa go up and down completely randomly.

Pair Corralation between Microsoft and Catur Sentosa

Given the investment horizon of 90 days Microsoft is expected to under-perform the Catur Sentosa. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 1.62 times less risky than Catur Sentosa. The stock trades about -0.12 of its potential returns per unit of risk. The Catur Sentosa Adiprana is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  44,800  in Catur Sentosa Adiprana on December 4, 2024 and sell it today you would lose (5,000) from holding Catur Sentosa Adiprana or give up 11.16% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.61%
Values	Daily Returns

Microsoft  vs.  Catur Sentosa Adiprana

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.

Catur Sentosa Adiprana

Risk-Adjusted Performance

Very Weak

Over the last 90 days Catur Sentosa Adiprana has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Microsoft and Catur Sentosa

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

The idea behind Microsoft and Catur Sentosa Adiprana 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .