Correlation Between Microsoft and APT Systems

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

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

Diversification Opportunities for Microsoft and APT Systems

0.28

Correlation Coefficient

Microsoft  APT Systems

Modest diversification

The 3 months correlation between Microsoft and APT is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and APT Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APT Systems 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 APT Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APT Systems has no effect on the direction of Microsoft i.e., Microsoft and APT Systems go up and down completely randomly.

Pair Corralation between Microsoft and APT Systems

Given the investment horizon of 90 days Microsoft is expected to under-perform the APT Systems. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 13.48 times less risky than APT Systems. The stock trades about -0.04 of its potential returns per unit of risk. The APT Systems is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  0.04  in APT Systems on September 3, 2025 and sell it today you would lose (0.01) from holding APT Systems or give up 25.0% of portfolio value over 90 days.

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

Microsoft  vs.  APT Systems

Microsoft

Risk-Adjusted Performance

Weakest

Over the last 90 days Microsoft has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Microsoft is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

APT Systems

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in APT Systems are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, APT Systems showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Microsoft and APT Systems

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

The idea behind Microsoft and APT Systems 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.

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 the Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.