Correlation Between Microsoft and ALBIS LEASING

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

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

Diversification Opportunities for Microsoft and ALBIS LEASING

0.42

Correlation Coefficient

Microsoft  ALBIS LEASING

Very weak diversification

The 3 months correlation between Microsoft and ALBIS is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and ALBIS LEASING AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALBIS LEASING AG 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 ALBIS LEASING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALBIS LEASING AG has no effect on the direction of Microsoft i.e., Microsoft and ALBIS LEASING go up and down completely randomly.

Pair Corralation between Microsoft and ALBIS LEASING

Assuming the 90 days trading horizon Microsoft is expected to generate 1.65 times more return on investment than ALBIS LEASING. However, Microsoft is 1.65 times more volatile than ALBIS LEASING AG. It trades about 0.11 of its potential returns per unit of risk. ALBIS LEASING AG is currently generating about 0.08 per unit of risk. If you would invest  20,742  in Microsoft on September 27, 2024 and sell it today you would earn a total of  21,088  from holding Microsoft or generate 101.67% return on investment over 90 days.

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

Microsoft  vs.  ALBIS LEASING AG

Microsoft

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical and fundamental indicators, Microsoft may actually be approaching a critical reversion point that can send shares even higher in January 2025.

ALBIS LEASING AG

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ALBIS LEASING AG are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, ALBIS LEASING is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Microsoft and ALBIS LEASING

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

The idea behind Microsoft and ALBIS LEASING AG 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.

Check out your portfolio center.

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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.