Correlation Between Microsoft and HAL Trust

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

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

Diversification Opportunities for Microsoft and HAL Trust

0.51

Correlation Coefficient

Microsoft  HAL Trust

Very weak diversification

The 3 months correlation between Microsoft and HAL is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and HAL Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HAL Trust 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 HAL Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HAL Trust has no effect on the direction of Microsoft i.e., Microsoft and HAL Trust go up and down completely randomly.

Pair Corralation between Microsoft and HAL Trust

Given the investment horizon of 90 days Microsoft is expected to generate 1.27 times more return on investment than HAL Trust. However, Microsoft is 1.27 times more volatile than HAL Trust. It trades about 0.06 of its potential returns per unit of risk. HAL Trust is currently generating about 0.0 per unit of risk. If you would invest  25,845  in Microsoft on February 14, 2024 and sell it today you would earn a total of  15,811  from holding Microsoft or generate 61.18% return on investment over 90 days.

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

Microsoft  vs.  HAL Trust

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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

HAL Trust

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HAL Trust are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, HAL Trust may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Microsoft and HAL Trust

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

The idea behind Microsoft and HAL Trust 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.