Correlation Between Microsoft and GCL Global

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

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

Diversification Opportunities for Microsoft and GCL Global

0.48

Correlation Coefficient

Microsoft  GCL Global

Very weak diversification

The 3 months correlation between Microsoft and GCL is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and GCL Global Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GCL Global Holdings 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 GCL Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GCL Global Holdings has no effect on the direction of Microsoft i.e., Microsoft and GCL Global go up and down completely randomly.

Pair Corralation between Microsoft and GCL Global

Given the investment horizon of 90 days Microsoft is expected to generate 0.16 times more return on investment than GCL Global. However, Microsoft is 6.13 times less risky than GCL Global. It trades about 0.06 of its potential returns per unit of risk. GCL Global Holdings is currently generating about 0.0 per unit of risk. If you would invest  26,797  in Microsoft on December 7, 2024 and sell it today you would earn a total of  12,892  from holding Microsoft or generate 48.11% return on investment over 90 days.

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

Microsoft  vs.  GCL Global Holdings

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.

GCL Global Holdings

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Microsoft and GCL Global

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

The idea behind Microsoft and GCL Global Holdings 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.