Correlation Between Microsoft and Kerry Logistics

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

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

Diversification Opportunities for Microsoft and Kerry Logistics

0.56

Correlation Coefficient

Microsoft  Kerry Logistics

Very weak diversification

The 3 months correlation between Microsoft and Kerry is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Kerry Logistics Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kerry Logistics Network 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 Kerry Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kerry Logistics Network has no effect on the direction of Microsoft i.e., Microsoft and Kerry Logistics go up and down completely randomly.

Pair Corralation between Microsoft and Kerry Logistics

Given the investment horizon of 90 days Microsoft is expected to generate 0.59 times more return on investment than Kerry Logistics. However, Microsoft is 1.68 times less risky than Kerry Logistics. It trades about -0.08 of its potential returns per unit of risk. Kerry Logistics Network is currently generating about -0.12 per unit of risk. If you would invest  43,012  in Microsoft on December 1, 2024 and sell it today you would lose (3,313) from holding Microsoft or give up 7.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.75%
Values	Daily Returns

Microsoft  vs.  Kerry Logistics Network

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.

Kerry Logistics Network

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kerry Logistics Network has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Microsoft and Kerry Logistics

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

The idea behind Microsoft and Kerry Logistics Network 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.