Correlation Between Microsoft and Genmab A/S

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

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

Diversification Opportunities for Microsoft and Genmab A/S

0.48

Correlation Coefficient

Microsoft  Genmab A/S

Very weak diversification

The 3 months correlation between Microsoft and Genmab is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Genmab AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genmab A/S 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 Genmab A/S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genmab A/S has no effect on the direction of Microsoft i.e., Microsoft and Genmab A/S go up and down completely randomly.

Pair Corralation between Microsoft and Genmab A/S

Given the investment horizon of 90 days Microsoft is expected to generate 0.37 times more return on investment than Genmab A/S. However, Microsoft is 2.68 times less risky than Genmab A/S. It trades about 0.33 of its potential returns per unit of risk. Genmab AS is currently generating about 0.02 per unit of risk. If you would invest  43,537  in Microsoft on May 4, 2025 and sell it today you would earn a total of  8,874  from holding Microsoft or generate 20.38% return on investment over 90 days.

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

Microsoft  vs.  Genmab AS

Microsoft

Risk-Adjusted Performance

Strong

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

Genmab A/S

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Genmab AS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Genmab A/S is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Microsoft and Genmab A/S

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

The idea behind Microsoft and Genmab AS 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.