Correlation Between Microsoft and Lixte Biotechnology

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

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

Diversification Opportunities for Microsoft and Lixte Biotechnology

0.69

Correlation Coefficient

Microsoft  Lixte Biotechnology

Poor diversification

The 3 months correlation between Microsoft and Lixte is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Lixte Biotechnology Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lixte Biotechnology 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 Lixte Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lixte Biotechnology has no effect on the direction of Microsoft i.e., Microsoft and Lixte Biotechnology go up and down completely randomly.

Pair Corralation between Microsoft and Lixte Biotechnology

Given the investment horizon of 90 days Microsoft is expected to generate 10.48 times less return on investment than Lixte Biotechnology. But when comparing it to its historical volatility, Microsoft is 16.7 times less risky than Lixte Biotechnology. It trades about 0.32 of its potential returns per unit of risk. Lixte Biotechnology Holdings is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  126.00  in Lixte Biotechnology Holdings on May 5, 2025 and sell it today you would earn a total of  361.00  from holding Lixte Biotechnology Holdings or generate 286.51% return on investment over 90 days.

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

Microsoft  vs.  Lixte Biotechnology Holdings

Microsoft

Risk-Adjusted Performance

Solid

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.

Lixte Biotechnology

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lixte Biotechnology Holdings are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Lixte Biotechnology unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Microsoft and Lixte Biotechnology

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

The idea behind Microsoft and Lixte Biotechnology Holdings 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.