Correlation Between Microsoft and GOING PUBL

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

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

Diversification Opportunities for Microsoft and GOING PUBL

-0.87

Correlation Coefficient

Microsoft  GOING PUBL

Pay attention - limited upside

The 3 months correlation between Microsoft and GOING is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and GOING PUBL MEDIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GOING PUBL MEDIA 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 GOING PUBL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GOING PUBL MEDIA has no effect on the direction of Microsoft i.e., Microsoft and GOING PUBL go up and down completely randomly.

Pair Corralation between Microsoft and GOING PUBL

Assuming the 90 days trading horizon Microsoft is expected to generate 2.05 times more return on investment than GOING PUBL. However, Microsoft is 2.05 times more volatile than GOING PUBL MEDIA. It trades about 0.11 of its potential returns per unit of risk. GOING PUBL MEDIA is currently generating about -0.47 per unit of risk. If you would invest  39,885  in Microsoft on September 30, 2024 and sell it today you would earn a total of  1,065  from holding Microsoft or generate 2.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	94.74%
Values	Daily Returns

Microsoft  vs.  GOING PUBL MEDIA

Microsoft

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Microsoft may actually be approaching a critical reversion point that can send shares even higher in January 2025.

GOING PUBL MEDIA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GOING PUBL MEDIA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Microsoft and GOING PUBL

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

The idea behind Microsoft and GOING PUBL MEDIA 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.