Correlation Between Microsoft and Pruksa Holding

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

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

Diversification Opportunities for Microsoft and Pruksa Holding

0.06

Correlation Coefficient

Microsoft  Pruksa Holding

Significant diversification

The 3 months correlation between Microsoft and Pruksa is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Pruksa Holding Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pruksa Holding Public 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 Pruksa Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pruksa Holding Public has no effect on the direction of Microsoft i.e., Microsoft and Pruksa Holding go up and down completely randomly.

Pair Corralation between Microsoft and Pruksa Holding

Given the investment horizon of 90 days Microsoft is expected to generate 0.54 times more return on investment than Pruksa Holding. However, Microsoft is 1.85 times less risky than Pruksa Holding. It trades about 0.06 of its potential returns per unit of risk. Pruksa Holding Public is currently generating about -0.05 per unit of risk. If you would invest  37,325  in Microsoft on September 24, 2024 and sell it today you would earn a total of  6,335  from holding Microsoft or generate 16.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.42%
Values	Daily Returns

Microsoft  vs.  Pruksa Holding Public

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 current stock price uproar, may contribute to short-horizon losses for the private investors.

Pruksa Holding Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pruksa Holding Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Microsoft and Pruksa Holding

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

The idea behind Microsoft and Pruksa Holding Public 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.