Correlation Between MicroStrategy Incorporated and Defentect

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

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

Diversification Opportunities for MicroStrategy Incorporated and Defentect

-0.38

Correlation Coefficient

MicroStrategy Incorporated  Defentect

Very good diversification

The 3 months correlation between MicroStrategy and Defentect is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding MicroStrategy Incorporated and Defentect Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Defentect Group and MicroStrategy Incorporated 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 MicroStrategy Incorporated are associated (or correlated) with Defentect. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Defentect Group has no effect on the direction of MicroStrategy Incorporated i.e., MicroStrategy Incorporated and Defentect go up and down completely randomly.

Pair Corralation between MicroStrategy Incorporated and Defentect

Given the investment horizon of 90 days MicroStrategy Incorporated is expected to generate 1.51 times less return on investment than Defentect. But when comparing it to its historical volatility, MicroStrategy Incorporated is 2.69 times less risky than Defentect. It trades about 0.11 of its potential returns per unit of risk. Defentect Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  0.55  in Defentect Group on April 21, 2025 and sell it today you would lose (0.10) from holding Defentect Group or give up 18.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.8%
Values	Daily Returns

MicroStrategy Incorporated  vs.  Defentect Group

MicroStrategy Incorporated

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MicroStrategy Incorporated are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, MicroStrategy Incorporated reported solid returns over the last few months and may actually be approaching a breakup point.

Defentect Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Defentect Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Defentect is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with MicroStrategy Incorporated and Defentect

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

The idea behind MicroStrategy Incorporated and Defentect 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.