Correlation Between Microsoft and ENEOS Holdings

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

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

Diversification Opportunities for Microsoft and ENEOS Holdings

-0.3

Correlation Coefficient

Microsoft  ENEOS Holdings

Very good diversification

The 3 months correlation between Microsoft and ENEOS is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and ENEOS Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENEOS 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 ENEOS Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENEOS Holdings has no effect on the direction of Microsoft i.e., Microsoft and ENEOS Holdings go up and down completely randomly.

Pair Corralation between Microsoft and ENEOS Holdings

Given the investment horizon of 90 days Microsoft is expected to under-perform the ENEOS Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 1.39 times less risky than ENEOS Holdings. The stock trades about -0.08 of its potential returns per unit of risk. The ENEOS Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  488.00  in ENEOS Holdings on December 29, 2024 and sell it today you would earn a total of  32.00  from holding ENEOS Holdings or generate 6.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

Microsoft  vs.  ENEOS 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.

ENEOS Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ENEOS Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ENEOS Holdings may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Microsoft and ENEOS Holdings

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

The idea behind Microsoft and ENEOS 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.