Correlation Between Microsoft and BitNine Co

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

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

Diversification Opportunities for Microsoft and BitNine Co

0.41

Correlation Coefficient

Microsoft  BitNine Co

Very weak diversification

The 3 months correlation between Microsoft and BitNine is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and BitNine Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BitNine Co 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 BitNine Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BitNine Co has no effect on the direction of Microsoft i.e., Microsoft and BitNine Co go up and down completely randomly.

Pair Corralation between Microsoft and BitNine Co

Given the investment horizon of 90 days Microsoft is expected to generate 21.81 times less return on investment than BitNine Co. But when comparing it to its historical volatility, Microsoft is 8.33 times less risky than BitNine Co. It trades about 0.04 of its potential returns per unit of risk. BitNine Co is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  175,357  in BitNine Co on September 27, 2024 and sell it today you would earn a total of  63,143  from holding BitNine Co or generate 36.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.88%
Values	Daily Returns

Microsoft  vs.  BitNine Co

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.

BitNine Co

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BitNine Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, BitNine Co sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Microsoft and BitNine Co

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

The idea behind Microsoft and BitNine Co 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.