Correlation Between Microlise Group and ActiveOps PLC

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

By analyzing existing cross correlation between Microlise Group PLC and ActiveOps PLC, you can compare the effects of market volatilities on Microlise Group and ActiveOps PLC 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 Microlise Group with a short position of ActiveOps PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microlise Group and ActiveOps PLC.

Diversification Opportunities for Microlise Group and ActiveOps PLC

0.71

Correlation Coefficient

Microlise Group  ActiveOps PLC

Poor diversification

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

Pair Corralation between Microlise Group and ActiveOps PLC

Assuming the 90 days trading horizon Microlise Group is expected to generate 1.85 times less return on investment than ActiveOps PLC. But when comparing it to its historical volatility, Microlise Group PLC is 1.43 times less risky than ActiveOps PLC. It trades about 0.29 of its potential returns per unit of risk. ActiveOps PLC is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest  9,650  in ActiveOps PLC on April 24, 2025 and sell it today you would earn a total of  8,600  from holding ActiveOps PLC or generate 89.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Microlise Group PLC  vs.  ActiveOps PLC

Microlise Group PLC

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Microlise Group PLC are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Microlise Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

ActiveOps PLC

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in ActiveOps PLC are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, ActiveOps PLC exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Microlise Group and ActiveOps PLC

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

The idea behind Microlise Group PLC and ActiveOps PLC 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.