Correlation Between Microsoft and PT Sunter

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

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

Diversification Opportunities for Microsoft and PT Sunter

-0.63

Correlation Coefficient

Microsoft  PT Sunter

Excellent diversification

The 3 months correlation between Microsoft and SNLK is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and PT Sunter Lakeside in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Sunter Lakeside 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 PT Sunter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Sunter Lakeside has no effect on the direction of Microsoft i.e., Microsoft and PT Sunter go up and down completely randomly.

Pair Corralation between Microsoft and PT Sunter

Given the investment horizon of 90 days Microsoft is expected to generate 0.42 times more return on investment than PT Sunter. However, Microsoft is 2.37 times less risky than PT Sunter. It trades about -0.11 of its potential returns per unit of risk. PT Sunter Lakeside is currently generating about -0.06 per unit of risk. If you would invest  42,398  in Microsoft on December 30, 2024 and sell it today you would lose (4,518) from holding Microsoft or give up 10.66% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.77%
Values	Daily Returns

Microsoft  vs.  PT Sunter Lakeside

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.

PT Sunter Lakeside

Risk-Adjusted Performance

Very Weak

Over the last 90 days PT Sunter Lakeside 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 forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Microsoft and PT Sunter

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

The idea behind Microsoft and PT Sunter Lakeside 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .