Correlation Between Microsoft and Siili Solutions

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

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

Diversification Opportunities for Microsoft and Siili Solutions

-0.44

Correlation Coefficient

Microsoft  Siili Solutions

Very good diversification

The 3 months correlation between Microsoft and Siili is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Siili Solutions Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siili Solutions 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 Siili Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siili Solutions Oyj has no effect on the direction of Microsoft i.e., Microsoft and Siili Solutions go up and down completely randomly.

Pair Corralation between Microsoft and Siili Solutions

Given the investment horizon of 90 days Microsoft is expected to generate 0.73 times more return on investment than Siili Solutions. However, Microsoft is 1.36 times less risky than Siili Solutions. It trades about 0.01 of its potential returns per unit of risk. Siili Solutions Oyj is currently generating about -0.32 per unit of risk. If you would invest  42,944  in Microsoft on September 30, 2024 and sell it today you would earn a total of  109.00  from holding Microsoft or generate 0.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.88%
Values	Daily Returns

Microsoft  vs.  Siili Solutions 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.

Siili Solutions Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Siili Solutions Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Microsoft and Siili Solutions

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

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