Correlation Between Microsoft and MB Securities

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

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

Diversification Opportunities for Microsoft and MB Securities

0.04

Correlation Coefficient

Microsoft  MB Securities

Significant diversification

The 3 months correlation between Microsoft and MBS is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and MB Securities JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MB Securities JSC 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 MB Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MB Securities JSC has no effect on the direction of Microsoft i.e., Microsoft and MB Securities go up and down completely randomly.

Pair Corralation between Microsoft and MB Securities

Given the investment horizon of 90 days Microsoft is expected to generate 3.14 times less return on investment than MB Securities. But when comparing it to its historical volatility, Microsoft is 1.89 times less risky than MB Securities. It trades about 0.07 of its potential returns per unit of risk. MB Securities JSC is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2,740,000  in MB Securities JSC on September 29, 2024 and sell it today you would earn a total of  160,000  from holding MB Securities JSC or generate 5.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	90.91%
Values	Daily Returns

Microsoft  vs.  MB Securities JSC

Microsoft

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Microsoft has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

MB Securities JSC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MB Securities JSC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Microsoft and MB Securities

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

The idea behind Microsoft and MB Securities JSC 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.