Correlation Between Microsoft and Atea ASA
Can any of the company-specific risk be diversified away by investing in both Microsoft and Atea ASA 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 Atea ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Atea ASA, you can compare the effects of market volatilities on Microsoft and Atea ASA 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 Atea ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Atea ASA.
Diversification Opportunities for Microsoft and Atea ASA
Poor diversification
The 3 months correlation between Microsoft and Atea is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Atea ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atea ASA 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 Atea ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atea ASA has no effect on the direction of Microsoft i.e., Microsoft and Atea ASA go up and down completely randomly.
Pair Corralation between Microsoft and Atea ASA
Assuming the 90 days trading horizon Microsoft is expected to generate 6.39 times less return on investment than Atea ASA. But when comparing it to its historical volatility, Microsoft is 7.69 times less risky than Atea ASA. It trades about 0.29 of its potential returns per unit of risk. Atea ASA is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 798.00 in Atea ASA on September 13, 2024 and sell it today you would earn a total of 404.00 from holding Atea ASA or generate 50.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Microsoft vs. Atea ASA
Performance |
| Timeline |
| Microsoft |
| Atea ASA |
Microsoft and Atea ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Atea ASA
The main advantage of trading using opposite Microsoft and Atea ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Atea ASA 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 Atea ASA will offset losses from the drop in Atea ASA's long position.| Microsoft vs. AEGEAN AIRLINES | Microsoft vs. United Airlines Holdings | Microsoft vs. American Airlines Group | Microsoft vs. ECHO INVESTMENT ZY |
| Atea ASA vs. GALENA MINING LTD | Atea ASA vs. BANKINTER ADR 2007 | Atea ASA vs. Perseus Mining Limited | Atea ASA vs. SERI INDUSTRIAL EO |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years |