Correlation Between Microsoft and NoHo Partners

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

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

Diversification Opportunities for Microsoft and NoHo Partners

0.68

Correlation Coefficient

Microsoft  NoHo Partners

Poor diversification

The 3 months correlation between Microsoft and NoHo is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and NoHo Partners Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NoHo Partners Oyj 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 NoHo Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NoHo Partners Oyj has no effect on the direction of Microsoft i.e., Microsoft and NoHo Partners go up and down completely randomly.

Pair Corralation between Microsoft and NoHo Partners

Given the investment horizon of 90 days Microsoft is expected to generate 13.59 times less return on investment than NoHo Partners. In addition to that, Microsoft is 1.09 times more volatile than NoHo Partners Oyj. It trades about 0.01 of its total potential returns per unit of risk. NoHo Partners Oyj is currently generating about 0.15 per unit of volatility. If you would invest  709.00  in NoHo Partners Oyj on September 28, 2024 and sell it today you would earn a total of  81.00  from holding NoHo Partners Oyj or generate 11.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.83%
Values	Daily Returns

Microsoft  vs.  NoHo Partners Oyj

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.

NoHo Partners Oyj

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NoHo Partners Oyj are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent technical and fundamental indicators, NoHo Partners may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Microsoft and NoHo Partners

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

The idea behind Microsoft and NoHo Partners Oyj 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.