Correlation Between Microsoft and Amatheon Agri

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

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

Diversification Opportunities for Microsoft and Amatheon Agri

-0.41

Correlation Coefficient

Microsoft  Amatheon Agri

Very good diversification

The 3 months correlation between Microsoft and Amatheon is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Amatheon Agri Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amatheon Agri Holding 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 Amatheon Agri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amatheon Agri Holding has no effect on the direction of Microsoft i.e., Microsoft and Amatheon Agri go up and down completely randomly.

Pair Corralation between Microsoft and Amatheon Agri

Given the investment horizon of 90 days Microsoft is expected to generate 0.08 times more return on investment than Amatheon Agri. However, Microsoft is 13.02 times less risky than Amatheon Agri. It trades about 0.03 of its potential returns per unit of risk. Amatheon Agri Holding is currently generating about -0.01 per unit of risk. If you would invest  43,045  in Microsoft on September 26, 2024 and sell it today you would earn a total of  888.00  from holding Microsoft or generate 2.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Microsoft  vs.  Amatheon Agri Holding

Microsoft

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 2 (%) 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.

Amatheon Agri Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amatheon Agri Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Microsoft and Amatheon Agri

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

The idea behind Microsoft and Amatheon Agri Holding 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.