Correlation Between Hammer Metals and Microsoft

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

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

Diversification Opportunities for Hammer Metals and Microsoft

0.0

Correlation Coefficient

Hammer Metals  Microsoft

Pay attention - limited upside

The 3 months correlation between Hammer and Microsoft is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Hammer Metals Limited and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft and Hammer Metals 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 Hammer Metals Limited 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 Hammer Metals i.e., Hammer Metals and Microsoft go up and down completely randomly.

Pair Corralation between Hammer Metals and Microsoft

If you would invest  4.00  in Hammer Metals Limited on January 26, 2024 and sell it today you would earn a total of  0.00  from holding Hammer Metals Limited or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

Hammer Metals Limited  vs.  Microsoft

Hammer Metals Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hammer Metals Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Hammer Metals 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

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.

Pair Trading with Hammer Metals and Microsoft

The main advantage of trading using opposite Hammer Metals and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hammer Metals 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 Hammer Metals Limited 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.