Correlation Between Microsoft Corp and HLS Therapeutics

Can any of the company-specific risk be diversified away by investing in both Microsoft Corp and HLS Therapeutics 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 HLS Therapeutics 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 HLS Therapeutics, you can compare the effects of market volatilities on Microsoft Corp and HLS Therapeutics 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 HLS Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft Corp and HLS Therapeutics.

Diversification Opportunities for Microsoft Corp and HLS Therapeutics

0.85

Correlation Coefficient

Microsoft Corp  HLS Therapeutics

Very poor diversification

The 3 months correlation between Microsoft and HLS is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft Corp CDR and HLS Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HLS Therapeutics 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 HLS Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HLS Therapeutics has no effect on the direction of Microsoft Corp i.e., Microsoft Corp and HLS Therapeutics go up and down completely randomly.

Pair Corralation between Microsoft Corp and HLS Therapeutics

Assuming the 90 days trading horizon Microsoft Corp CDR is expected to generate 0.78 times more return on investment than HLS Therapeutics. However, Microsoft Corp CDR is 1.28 times less risky than HLS Therapeutics. It trades about 0.36 of its potential returns per unit of risk. HLS Therapeutics is currently generating about 0.16 per unit of risk. If you would invest  2,720  in Microsoft Corp CDR on April 23, 2025 and sell it today you would earn a total of  955.00  from holding Microsoft Corp CDR or generate 35.11% return on investment over 90 days.

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

Microsoft Corp CDR  vs.  HLS Therapeutics

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 28 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Microsoft Corp exhibited solid returns over the last few months and may actually be approaching a breakup point.

HLS Therapeutics

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in HLS Therapeutics are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, HLS Therapeutics displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Microsoft Corp and HLS Therapeutics

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

The idea behind Microsoft Corp CDR and HLS Therapeutics 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .