Correlation Between Microsoft and MMC Sanayi

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

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

Diversification Opportunities for Microsoft and MMC Sanayi

-0.36

Correlation Coefficient

Microsoft  MMC Sanayi

Very good diversification

The 3 months correlation between Microsoft and MMC is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and MMC Sanayi ve in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MMC Sanayi ve 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 MMC Sanayi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MMC Sanayi ve has no effect on the direction of Microsoft i.e., Microsoft and MMC Sanayi go up and down completely randomly.

Pair Corralation between Microsoft and MMC Sanayi

Given the investment horizon of 90 days Microsoft is expected to under-perform the MMC Sanayi. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 1.46 times less risky than MMC Sanayi. The stock trades about -0.18 of its potential returns per unit of risk. The MMC Sanayi ve is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  2,016  in MMC Sanayi ve on October 8, 2024 and sell it today you would earn a total of  156.00  from holding MMC Sanayi ve or generate 7.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Microsoft  vs.  MMC Sanayi ve

Microsoft

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 2 (%) 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.

MMC Sanayi ve

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MMC Sanayi ve has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Microsoft and MMC Sanayi

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

The idea behind Microsoft and MMC Sanayi ve 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.