Correlation Between Microsoft and Bonus BioGroup
Can any of the company-specific risk be diversified away by investing in both Microsoft and Bonus BioGroup 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 Bonus BioGroup into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Bonus BioGroup, you can compare the effects of market volatilities on Microsoft and Bonus BioGroup 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 Bonus BioGroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Bonus BioGroup.
Diversification Opportunities for Microsoft and Bonus BioGroup
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Microsoft and Bonus is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Bonus BioGroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bonus BioGroup 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 Bonus BioGroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bonus BioGroup has no effect on the direction of Microsoft i.e., Microsoft and Bonus BioGroup go up and down completely randomly.
Pair Corralation between Microsoft and Bonus BioGroup
Given the investment horizon of 90 days Microsoft is expected to generate 91.3 times less return on investment than Bonus BioGroup. But when comparing it to its historical volatility, Microsoft is 73.66 times less risky than Bonus BioGroup. It trades about 0.07 of its potential returns per unit of risk. Bonus BioGroup is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1.00 in Bonus BioGroup on September 14, 2024 and sell it today you would earn a total of 1.00 from holding Bonus BioGroup or generate 100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Bonus BioGroup
Performance |
| Timeline |
| Microsoft |
| Bonus BioGroup |
Microsoft and Bonus BioGroup Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Bonus BioGroup
The main advantage of trading using opposite Microsoft and Bonus BioGroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Bonus BioGroup 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 Bonus BioGroup will offset losses from the drop in Bonus BioGroup's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Bonus BioGroup vs. Sino Biopharmaceutical Ltd | Bonus BioGroup vs. Defence Therapeutics | Bonus BioGroup vs. Aileron Therapeutics | Bonus BioGroup vs. Enlivex Therapeutics |
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 Positions Ratings module to 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.
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