Correlation Between Microsoft Corp and Allied Properties

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

By analyzing existing cross correlation between Microsoft Corp CDR and Allied Properties Real, you can compare the effects of market volatilities on Microsoft Corp and Allied Properties 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 Allied Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft Corp and Allied Properties.

Diversification Opportunities for Microsoft Corp and Allied Properties

0.79

Correlation Coefficient

Microsoft Corp  Allied Properties

Poor diversification

The 3 months correlation between Microsoft and Allied is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft Corp CDR and Allied Properties Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allied Properties Real 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 CDR are associated (or correlated) with Allied Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allied Properties Real has no effect on the direction of Microsoft Corp i.e., Microsoft Corp and Allied Properties go up and down completely randomly.

Pair Corralation between Microsoft Corp and Allied Properties

Assuming the 90 days trading horizon Microsoft Corp CDR is expected to generate 0.95 times more return on investment than Allied Properties. However, Microsoft Corp CDR is 1.05 times less risky than Allied Properties. It trades about 0.32 of its potential returns per unit of risk. Allied Properties Real is currently generating about 0.2 per unit of risk. If you would invest  2,809  in Microsoft Corp CDR on April 24, 2025 and sell it today you would earn a total of  836.00  from holding Microsoft Corp CDR or generate 29.76% return on investment over 90 days.

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

Microsoft Corp CDR  vs.  Allied Properties Real

Microsoft Corp CDR

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft Corp CDR are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, Microsoft Corp exhibited solid returns over the last few months and may actually be approaching a breakup point.

Allied Properties Real

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Allied Properties Real are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Allied Properties unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Microsoft Corp and Allied Properties

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

The idea behind Microsoft Corp CDR and Allied Properties Real 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.