Correlation Between Microsoft and Schibsted ASA

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

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

Diversification Opportunities for Microsoft and Schibsted ASA

0.25

Correlation Coefficient

Microsoft  Schibsted ASA

Modest diversification

The 3 months correlation between Microsoft and Schibsted is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Schibsted ASA A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schibsted ASA A 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 Schibsted ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schibsted ASA A has no effect on the direction of Microsoft i.e., Microsoft and Schibsted ASA go up and down completely randomly.

Pair Corralation between Microsoft and Schibsted ASA

Given the investment horizon of 90 days Microsoft is expected to generate 2.56 times less return on investment than Schibsted ASA. But when comparing it to its historical volatility, Microsoft is 1.35 times less risky than Schibsted ASA. It trades about 0.02 of its potential returns per unit of risk. Schibsted ASA A is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  33,920  in Schibsted ASA A on September 22, 2024 and sell it today you would earn a total of  980.00  from holding Schibsted ASA A or generate 2.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.97%
Values	Daily Returns

Microsoft  vs.  Schibsted ASA A

Microsoft

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 1 (%) 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 current stock price uproar, may contribute to short-horizon losses for the private investors.

Schibsted ASA A

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Schibsted ASA A are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Schibsted ASA 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 Schibsted ASA

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

The idea behind Microsoft and Schibsted ASA A 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.