Correlation Between Microsoft and Emeren

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

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

Diversification Opportunities for Microsoft and Emeren

-0.26

Correlation Coefficient

Microsoft  Emeren

Very good diversification

The 3 months correlation between Microsoft and Emeren is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Emeren Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emeren Group 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 Emeren. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emeren Group has no effect on the direction of Microsoft i.e., Microsoft and Emeren go up and down completely randomly.

Pair Corralation between Microsoft and Emeren

Given the investment horizon of 90 days Microsoft is expected to generate 1.08 times more return on investment than Emeren. However, Microsoft is 1.08 times more volatile than Emeren Group. It trades about 0.07 of its potential returns per unit of risk. Emeren Group is currently generating about -0.01 per unit of risk. If you would invest  49,802  in Microsoft on July 3, 2025 and sell it today you would earn a total of  2,169  from holding Microsoft or generate 4.36% return on investment over 90 days.

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

Microsoft  vs.  Emeren Group

Microsoft

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Microsoft is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Emeren Group

Risk-Adjusted Performance

Weakest

Over the last 90 days Emeren Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Emeren is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Microsoft and Emeren

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

The idea behind Microsoft and Emeren Group 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.