Correlation Between Microsoft and Bintang Mitra

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

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

Diversification Opportunities for Microsoft and Bintang Mitra

-0.5

Correlation Coefficient

Microsoft  Bintang Mitra

Very good diversification

The 3 months correlation between Microsoft and Bintang is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Bintang Mitra Semestaraya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bintang Mitra Semestaraya 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 Bintang Mitra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bintang Mitra Semestaraya has no effect on the direction of Microsoft i.e., Microsoft and Bintang Mitra go up and down completely randomly.

Pair Corralation between Microsoft and Bintang Mitra

Given the investment horizon of 90 days Microsoft is expected to generate 0.49 times more return on investment than Bintang Mitra. However, Microsoft is 2.05 times less risky than Bintang Mitra. It trades about 0.1 of its potential returns per unit of risk. Bintang Mitra Semestaraya is currently generating about -0.05 per unit of risk. If you would invest  23,313  in Microsoft on September 14, 2024 and sell it today you would earn a total of  21,643  from holding Microsoft or generate 92.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.75%
Values	Daily Returns

Microsoft  vs.  Bintang Mitra Semestaraya

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.

Bintang Mitra Semestaraya

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bintang Mitra Semestaraya has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Bintang Mitra is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Microsoft and Bintang Mitra

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

The idea behind Microsoft and Bintang Mitra Semestaraya 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.