Correlation Between Microsoft and BAKED GAMES

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

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

Diversification Opportunities for Microsoft and BAKED GAMES

-0.71

Correlation Coefficient

Microsoft  BAKED GAMES

Pay attention - limited upside

The 3 months correlation between Microsoft and BAKED is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and BAKED GAMES SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BAKED GAMES SA 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 BAKED GAMES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BAKED GAMES SA has no effect on the direction of Microsoft i.e., Microsoft and BAKED GAMES go up and down completely randomly.

Pair Corralation between Microsoft and BAKED GAMES

Assuming the 90 days trading horizon Microsoft is expected to generate 0.65 times more return on investment than BAKED GAMES. However, Microsoft is 1.54 times less risky than BAKED GAMES. It trades about 0.24 of its potential returns per unit of risk. BAKED GAMES SA is currently generating about -0.05 per unit of risk. If you would invest  33,729  in Microsoft on April 24, 2025 and sell it today you would earn a total of  9,551  from holding Microsoft or generate 28.32% return on investment over 90 days.

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

Microsoft  vs.  BAKED GAMES SA

Microsoft

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile technical and fundamental indicators, Microsoft displayed solid returns over the last few months and may actually be approaching a breakup point.

BAKED GAMES SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days BAKED GAMES SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Microsoft and BAKED GAMES

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

The idea behind Microsoft and BAKED GAMES SA 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.