Correlation Between Microsoft and Industria

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

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

Diversification Opportunities for Microsoft and Industria

-0.26

Correlation Coefficient

Microsoft  Industria

Very good diversification

The 3 months correlation between Microsoft and Industria is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Industria de Diseno in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industria de Diseno 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 Industria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industria de Diseno has no effect on the direction of Microsoft i.e., Microsoft and Industria go up and down completely randomly.

Pair Corralation between Microsoft and Industria

Given the investment horizon of 90 days Microsoft is expected to generate 0.91 times more return on investment than Industria. However, Microsoft is 1.1 times less risky than Industria. It trades about 0.01 of its potential returns per unit of risk. Industria de Diseno is currently generating about -0.13 per unit of risk. If you would invest  41,830  in Microsoft on October 13, 2024 and sell it today you would earn a total of  65.00  from holding Microsoft or generate 0.16% return on investment over 90 days.

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

Microsoft  vs.  Industria de Diseno

Microsoft

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Microsoft has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Industria de Diseno

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Industria de Diseno has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Microsoft and Industria

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

The idea behind Microsoft and Industria de Diseno 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.