Correlation Between Microsoft and Artemis Gold

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

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

Diversification Opportunities for Microsoft and Artemis Gold

0.38

Correlation Coefficient

Microsoft  Artemis Gold

Weak diversification

The 3 months correlation between Microsoft and Artemis is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Artemis Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Artemis Gold 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 Artemis Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Artemis Gold has no effect on the direction of Microsoft i.e., Microsoft and Artemis Gold go up and down completely randomly.

Pair Corralation between Microsoft and Artemis Gold

Given the investment horizon of 90 days Microsoft is expected to generate 1.87 times less return on investment than Artemis Gold. But when comparing it to its historical volatility, Microsoft is 2.55 times less risky than Artemis Gold. It trades about 0.05 of its potential returns per unit of risk. Artemis Gold is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  975.00  in Artemis Gold on September 15, 2024 and sell it today you would earn a total of  49.00  from holding Artemis Gold or generate 5.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Microsoft  vs.  Artemis Gold

Microsoft

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 4 (%) 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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

Artemis Gold

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Artemis Gold are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Artemis Gold may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Microsoft and Artemis Gold

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

The idea behind Microsoft and Artemis Gold 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.