Correlation Between Microsoft and HORIZON SPACE

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

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

Diversification Opportunities for Microsoft and HORIZON SPACE

-0.45

Correlation Coefficient

Microsoft  HORIZON SPACE

Very good diversification

The 3 months correlation between Microsoft and HORIZON is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and HORIZON SPACE ACQUISITION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HORIZON SPACE ACQUISITION 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 HORIZON SPACE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HORIZON SPACE ACQUISITION has no effect on the direction of Microsoft i.e., Microsoft and HORIZON SPACE go up and down completely randomly.

Pair Corralation between Microsoft and HORIZON SPACE

If you would invest  40,862  in Microsoft on September 2, 2024 and sell it today you would earn a total of  1,484  from holding Microsoft or generate 3.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

Microsoft  vs.  HORIZON SPACE ACQUISITION

Microsoft

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 3 (%) 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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

HORIZON SPACE ACQUISITION

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HORIZON SPACE ACQUISITION has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, HORIZON SPACE is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Microsoft and HORIZON SPACE

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

The idea behind Microsoft and HORIZON SPACE ACQUISITION 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.