Correlation Between Microsoft and Handelsinvest Danske

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

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

Diversification Opportunities for Microsoft and Handelsinvest Danske

0.64

Correlation Coefficient

Microsoft  Handelsinvest Danske

Poor diversification

The 3 months correlation between Microsoft and Handelsinvest is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Handelsinvest Danske Obligatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Handelsinvest Danske 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 Handelsinvest Danske. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Handelsinvest Danske has no effect on the direction of Microsoft i.e., Microsoft and Handelsinvest Danske go up and down completely randomly.

Pair Corralation between Microsoft and Handelsinvest Danske

Given the investment horizon of 90 days Microsoft is expected to generate 11.36 times more return on investment than Handelsinvest Danske. However, Microsoft is 11.36 times more volatile than Handelsinvest Danske Obligationer. It trades about 0.22 of its potential returns per unit of risk. Handelsinvest Danske Obligationer is currently generating about 0.22 per unit of risk. If you would invest  41,287  in Microsoft on September 22, 2024 and sell it today you would earn a total of  2,373  from holding Microsoft or generate 5.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	91.3%
Values	Daily Returns

Microsoft  vs.  Handelsinvest Danske Obligatio

Microsoft

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Microsoft is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Handelsinvest Danske

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Handelsinvest Danske Obligationer are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward-looking signals, Handelsinvest Danske is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Microsoft and Handelsinvest Danske

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

The idea behind Microsoft and Handelsinvest Danske Obligationer 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.