Correlation Between Microsoft and EMQQ Emerging

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

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

Diversification Opportunities for Microsoft and EMQQ Emerging

-0.6

Correlation Coefficient

Microsoft  EMQQ Emerging

Excellent diversification

The 3 months correlation between Microsoft and EMQQ is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and EMQQ The Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMQQ The Emerging 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 EMQQ Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMQQ The Emerging has no effect on the direction of Microsoft i.e., Microsoft and EMQQ Emerging go up and down completely randomly.

Pair Corralation between Microsoft and EMQQ Emerging

Given the investment horizon of 90 days Microsoft is expected to under-perform the EMQQ Emerging. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 1.05 times less risky than EMQQ Emerging. The stock trades about -0.12 of its potential returns per unit of risk. The EMQQ The Emerging is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  3,540  in EMQQ The Emerging on December 20, 2024 and sell it today you would earn a total of  499.00  from holding EMQQ The Emerging or generate 14.1% return on investment over 90 days.

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

Microsoft  vs.  EMQQ The Emerging

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.

EMQQ The Emerging

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in EMQQ The Emerging are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, EMQQ Emerging reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Microsoft and EMQQ Emerging

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

The idea behind Microsoft and EMQQ The Emerging 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.