Correlation Between Microsoft and LIVZON PHARMAC

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

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

Diversification Opportunities for Microsoft and LIVZON PHARMAC

-0.24

Correlation Coefficient

Microsoft  LIVZON PHARMAC

Very good diversification

The 3 months correlation between Microsoft and LIVZON is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and LIVZON PHARMAC GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIVZON PHARMAC GRP 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 LIVZON PHARMAC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LIVZON PHARMAC GRP has no effect on the direction of Microsoft i.e., Microsoft and LIVZON PHARMAC go up and down completely randomly.

Pair Corralation between Microsoft and LIVZON PHARMAC

Given the investment horizon of 90 days Microsoft is expected to generate 3.32 times less return on investment than LIVZON PHARMAC. But when comparing it to its historical volatility, Microsoft is 4.8 times less risky than LIVZON PHARMAC. It trades about 0.1 of its potential returns per unit of risk. LIVZON PHARMAC GRP is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  66.00  in LIVZON PHARMAC GRP on September 13, 2024 and sell it today you would earn a total of  260.00  from holding LIVZON PHARMAC GRP or generate 393.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.82%
Values	Daily Returns

Microsoft  vs.  LIVZON PHARMAC GRP

Microsoft

Risk-Adjusted Performance

4 of 100

Modest

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.

LIVZON PHARMAC GRP

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in LIVZON PHARMAC GRP are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, LIVZON PHARMAC reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Microsoft and LIVZON PHARMAC

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

The idea behind Microsoft and LIVZON PHARMAC GRP 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.