Correlation Between Microsoft and Vintcom Technology

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

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

Diversification Opportunities for Microsoft and Vintcom Technology

-0.22

Correlation Coefficient

Microsoft  Vintcom Technology

Very good diversification

The 3 months correlation between Microsoft and Vintcom is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Vintcom Technology PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vintcom Technology PCL 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 Vintcom Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vintcom Technology PCL has no effect on the direction of Microsoft i.e., Microsoft and Vintcom Technology go up and down completely randomly.

Pair Corralation between Microsoft and Vintcom Technology

Given the investment horizon of 90 days Microsoft is expected to generate 12.39 times less return on investment than Vintcom Technology. But when comparing it to its historical volatility, Microsoft is 32.14 times less risky than Vintcom Technology. It trades about 0.1 of its potential returns per unit of risk. Vintcom Technology PCL is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  434.00  in Vintcom Technology PCL on September 13, 2024 and sell it today you would lose (188.00) from holding Vintcom Technology PCL or give up 43.32% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.17%
Values	Daily Returns

Microsoft  vs.  Vintcom Technology PCL

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.

Vintcom Technology PCL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vintcom Technology PCL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Microsoft and Vintcom Technology

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

The idea behind Microsoft and Vintcom Technology PCL 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.