Correlation Between Microsoft and Agrogalaxy Participacoes

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

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

Diversification Opportunities for Microsoft and Agrogalaxy Participacoes

-0.77

Correlation Coefficient

Microsoft  Agrogalaxy Participacoes

Pay attention - limited upside

The 3 months correlation between Microsoft and Agrogalaxy is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Agrogalaxy Participacoes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agrogalaxy Participacoes 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 Agrogalaxy Participacoes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agrogalaxy Participacoes has no effect on the direction of Microsoft i.e., Microsoft and Agrogalaxy Participacoes go up and down completely randomly.

Pair Corralation between Microsoft and Agrogalaxy Participacoes

Assuming the 90 days trading horizon Microsoft is expected to generate 0.18 times more return on investment than Agrogalaxy Participacoes. However, Microsoft is 5.6 times less risky than Agrogalaxy Participacoes. It trades about 0.34 of its potential returns per unit of risk. Agrogalaxy Participacoes SA is currently generating about -0.02 per unit of risk. If you would invest  9,133  in Microsoft on April 24, 2025 and sell it today you would earn a total of  2,646  from holding Microsoft or generate 28.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Microsoft  vs.  Agrogalaxy Participacoes SA

Microsoft

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Microsoft sustained solid returns over the last few months and may actually be approaching a breakup point.

Agrogalaxy Participacoes

Risk-Adjusted Performance

Very Weak

Over the last 90 days Agrogalaxy Participacoes SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Microsoft and Agrogalaxy Participacoes

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

The idea behind Microsoft and Agrogalaxy Participacoes 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.