Correlation Between Microsoft and KLP AksjeGlobal

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

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

Diversification Opportunities for Microsoft and KLP AksjeGlobal

0.45

Correlation Coefficient

Microsoft  KLP AksjeGlobal

Very weak diversification

The 3 months correlation between Microsoft and KLP is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and KLP AksjeGlobal Flerfaktor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KLP AksjeGlobal Fler 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 KLP AksjeGlobal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KLP AksjeGlobal Fler has no effect on the direction of Microsoft i.e., Microsoft and KLP AksjeGlobal go up and down completely randomly.

Pair Corralation between Microsoft and KLP AksjeGlobal

Given the investment horizon of 90 days Microsoft is expected to generate 2.79 times more return on investment than KLP AksjeGlobal. However, Microsoft is 2.79 times more volatile than KLP AksjeGlobal Flerfaktor. It trades about 0.1 of its potential returns per unit of risk. KLP AksjeGlobal Flerfaktor is currently generating about 0.13 per unit of risk. If you would invest  23,074  in Microsoft on September 18, 2024 and sell it today you would earn a total of  22,085  from holding Microsoft or generate 95.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.61%
Values	Daily Returns

Microsoft  vs.  KLP AksjeGlobal Flerfaktor

Microsoft

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 5 (%) 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 current stock price uproar, may contribute to short-horizon losses for the private investors.

KLP AksjeGlobal Fler

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KLP AksjeGlobal Flerfaktor are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, KLP AksjeGlobal is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Microsoft and KLP AksjeGlobal

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

The idea behind Microsoft and KLP AksjeGlobal Flerfaktor 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 Commodity Directory module to find actively traded commodities issued by global exchanges.