Correlation Between Microsoft and VTC Telecommunicatio

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Can any of the company-specific risk be diversified away by investing in both Microsoft and VTC Telecommunicatio 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 VTC Telecommunicatio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and VTC Telecommunications JSC, you can compare the effects of market volatilities on Microsoft and VTC Telecommunicatio 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 VTC Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and VTC Telecommunicatio.

Diversification Opportunities for Microsoft and VTC Telecommunicatio

-0.4
  Correlation Coefficient

Very good diversification

The 3 months correlation between Microsoft and VTC is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and VTC Telecommunications JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VTC Telecommunications 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 VTC Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VTC Telecommunications has no effect on the direction of Microsoft i.e., Microsoft and VTC Telecommunicatio go up and down completely randomly.

Pair Corralation between Microsoft and VTC Telecommunicatio

Given the investment horizon of 90 days Microsoft is expected to generate 0.38 times more return on investment than VTC Telecommunicatio. However, Microsoft is 2.66 times less risky than VTC Telecommunicatio. It trades about 0.44 of its potential returns per unit of risk. VTC Telecommunications JSC is currently generating about 0.05 per unit of risk. If you would invest  35,846  in Microsoft on April 21, 2025 and sell it today you would earn a total of  15,159  from holding Microsoft or generate 42.29% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy71.43%
ValuesDaily Returns

Microsoft  vs.  VTC Telecommunications JSC

 Performance 
       Timeline  
Microsoft 

Risk-Adjusted Performance

Very Strong

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 34 (%) 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.
VTC Telecommunications 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in VTC Telecommunications JSC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, VTC Telecommunicatio may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Microsoft and VTC Telecommunicatio Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Microsoft and VTC Telecommunicatio

The main advantage of trading using opposite Microsoft and VTC Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, VTC Telecommunicatio 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 VTC Telecommunicatio will offset losses from the drop in VTC Telecommunicatio's long position.
The idea behind Microsoft and VTC Telecommunications JSC 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.
Check out your portfolio center.
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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