Correlation Between Microsoft and SANUK

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

By analyzing existing cross correlation between Microsoft and SANUK 6833 21 NOV 26, you can compare the effects of market volatilities on Microsoft and SANUK 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 SANUK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and SANUK.

Diversification Opportunities for Microsoft and SANUK

0.03

Correlation Coefficient

Microsoft  SANUK

Significant diversification

The 3 months correlation between Microsoft and SANUK is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and SANUK 6833 21 NOV 26 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SANUK 6833 21 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 SANUK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SANUK 6833 21 has no effect on the direction of Microsoft i.e., Microsoft and SANUK go up and down completely randomly.

Pair Corralation between Microsoft and SANUK

Given the investment horizon of 90 days Microsoft is expected to generate 6.69 times more return on investment than SANUK. However, Microsoft is 6.69 times more volatile than SANUK 6833 21 NOV 26. It trades about 0.06 of its potential returns per unit of risk. SANUK 6833 21 NOV 26 is currently generating about 0.03 per unit of risk. If you would invest  37,464  in Microsoft on September 15, 2024 and sell it today you would earn a total of  7,263  from holding Microsoft or generate 19.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	89.96%
Values	Daily Returns

Microsoft  vs.  SANUK 6833 21 NOV 26

Microsoft

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 4 (%) 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.

SANUK 6833 21

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SANUK 6833 21 NOV 26 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SANUK is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Microsoft and SANUK

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

The idea behind Microsoft and SANUK 6833 21 NOV 26 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.