Correlation Between Microsoft and Brighton Best

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

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

Diversification Opportunities for Microsoft and Brighton Best

-0.39

Correlation Coefficient

Microsoft  Brighton Best

Very good diversification

The 3 months correlation between Microsoft and Brighton is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Brighton Best International Ta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brighton Best Intern 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 Brighton Best. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brighton Best Intern has no effect on the direction of Microsoft i.e., Microsoft and Brighton Best go up and down completely randomly.

Pair Corralation between Microsoft and Brighton Best

Given the investment horizon of 90 days Microsoft is expected to generate 1.11 times more return on investment than Brighton Best. However, Microsoft is 1.11 times more volatile than Brighton Best International Taiwan. It trades about 0.02 of its potential returns per unit of risk. Brighton Best International Taiwan is currently generating about 0.01 per unit of risk. If you would invest  43,264  in Microsoft on September 23, 2024 and sell it today you would earn a total of  396.00  from holding Microsoft or generate 0.92% return on investment over 90 days.

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

Microsoft  vs.  Brighton Best International Ta

Microsoft

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 1 (%) 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.

Brighton Best Intern

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Brighton Best International Taiwan are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Brighton Best is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Microsoft and Brighton Best

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

The idea behind Microsoft and Brighton Best International Taiwan 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.