Correlation Between REINET INVESTMENTS and Microsoft

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

By analyzing existing cross correlation between REINET INVESTMENTS SCA and Microsoft, you can compare the effects of market volatilities on REINET INVESTMENTS and Microsoft 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 REINET INVESTMENTS with a short position of Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of REINET INVESTMENTS and Microsoft.

Diversification Opportunities for REINET INVESTMENTS and Microsoft

0.25

Correlation Coefficient

REINET INVESTMENTS  Microsoft

Modest diversification

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

Pair Corralation between REINET INVESTMENTS and Microsoft

Assuming the 90 days horizon REINET INVESTMENTS is expected to generate 3.04 times less return on investment than Microsoft. In addition to that, REINET INVESTMENTS is 2.16 times more volatile than Microsoft. It trades about 0.02 of its total potential returns per unit of risk. Microsoft is currently generating about 0.1 per unit of volatility. If you would invest  38,324  in Microsoft on September 24, 2024 and sell it today you would earn a total of  3,391  from holding Microsoft or generate 8.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

REINET INVESTMENTS SCA  vs.  Microsoft

REINET INVESTMENTS SCA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in REINET INVESTMENTS SCA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, REINET INVESTMENTS is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Microsoft

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Microsoft may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with REINET INVESTMENTS and Microsoft

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

The idea behind REINET INVESTMENTS SCA and Microsoft 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.