Correlation Between Microsoft Corp and APPTECH CORP

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Microsoft Corp and APPTECH CORP 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 Corp and APPTECH CORP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft Corp and APPTECH CORP, you can compare the effects of market volatilities on Microsoft Corp and APPTECH CORP 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 Corp with a short position of APPTECH CORP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft Corp and APPTECH CORP.

Diversification Opportunities for Microsoft Corp and APPTECH CORP

0.18
  Correlation Coefficient

Average diversification

The 3 months correlation between Microsoft and APPTECH is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft Corp and APPTECH CORP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APPTECH CORP and Microsoft Corp 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 Corp are associated (or correlated) with APPTECH CORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APPTECH CORP has no effect on the direction of Microsoft Corp i.e., Microsoft Corp and APPTECH CORP go up and down completely randomly.

Pair Corralation between Microsoft Corp and APPTECH CORP

Given the investment horizon of 90 days Microsoft Corp is expected to generate 10.82 times less return on investment than APPTECH CORP. But when comparing it to its historical volatility, Microsoft Corp is 8.51 times less risky than APPTECH CORP. It trades about 0.05 of its potential returns per unit of risk. APPTECH CORP is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  150.00  in APPTECH CORP on May 16, 2022 and sell it today you would lose (66.00)  from holding APPTECH CORP or give up 44.0% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy99.8%
ValuesDaily Returns

Microsoft Corp  vs.  APPTECH CORP

 Performance (%) 
       Timeline  
Microsoft Corp 
Microsoft Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Microsoft Corp may actually be approaching a critical reversion point that can send shares even higher in September 2022.

Microsoft Price Channel

APPTECH CORP 
APPTECH Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in APPTECH CORP are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, APPTECH CORP showed solid returns over the last few months and may actually be approaching a breakup point.

APPTECH Price Channel

Microsoft Corp and APPTECH CORP Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Microsoft Corp and APPTECH CORP

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

Microsoft Corp

Pair trading matchups for Microsoft Corp

Prog Hldgs vs. Microsoft Corp
Semiconductor Bear vs. Microsoft Corp
Universal Health vs. Microsoft Corp
Rolls Royce vs. Microsoft Corp
Nike vs. Microsoft Corp
Essential Properties vs. Microsoft Corp
Cto Realty vs. Microsoft Corp
Ark Innovation vs. Microsoft Corp
Horizon Therapeutics vs. Microsoft Corp
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Microsoft Corp as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Microsoft Corp's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Microsoft Corp's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Microsoft Corp.
The idea behind Microsoft Corp and APPTECH CORP 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.

APPTECH CORP

Pair trading matchups for APPTECH CORP

Prog Hldgs vs. APPTECH CORP
Semiconductor Bear vs. APPTECH CORP
Ark Innovation vs. APPTECH CORP
Cto Realty vs. APPTECH CORP
Universal Health vs. APPTECH CORP
Olema Pharmaceuticals vs. APPTECH CORP
Nike vs. APPTECH CORP
Essential Properties vs. APPTECH CORP
Horizon Therapeutics vs. APPTECH CORP
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against APPTECH CORP as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. APPTECH CORP's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, APPTECH CORP's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to APPTECH CORP.
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..

Other Complementary Tools

Probability Of Bankruptcy
Get analysis of equity chance of financial distress in the next 2 years
Go
Content Syndication
Quickly integrate customizable finance content to your own investment portal
Go
CEO Directory
Screen CEOs from public companies around the world
Go
Fund Screener
Find actively-traded funds from around the world traded on over 30 global exchanges
Go
Idea Analyzer
Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas
Go
Transaction History
View history of all your transactions and understand their impact on performance
Go
Analyst Recommendations
Analyst recommendations and target price estimates broken down by several categories
Go