Correlation Between PLAYSTUDIOS and Microsoft

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

By analyzing existing cross correlation between PLAYSTUDIOS A DL 0001 and Microsoft, you can compare the effects of market volatilities on PLAYSTUDIOS and Microsoft 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 PLAYSTUDIOS with a short position of Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of PLAYSTUDIOS and Microsoft.

Diversification Opportunities for PLAYSTUDIOS and Microsoft

0.89

Correlation Coefficient

PLAYSTUDIOS  Microsoft

Very poor diversification

The 3 months correlation between PLAYSTUDIOS and Microsoft is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding PLAYSTUDIOS A DL 0001 and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft and PLAYSTUDIOS 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 PLAYSTUDIOS A DL 0001 are associated (or correlated) with Microsoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft has no effect on the direction of PLAYSTUDIOS i.e., PLAYSTUDIOS and Microsoft go up and down completely randomly.

Pair Corralation between PLAYSTUDIOS and Microsoft

Assuming the 90 days horizon PLAYSTUDIOS A DL 0001 is expected to generate 2.42 times more return on investment than Microsoft. However, PLAYSTUDIOS is 2.42 times more volatile than Microsoft. It trades about 0.17 of its potential returns per unit of risk. Microsoft is currently generating about 0.08 per unit of risk. If you would invest  132.00  in PLAYSTUDIOS A DL 0001 on September 22, 2024 and sell it today you would earn a total of  55.00  from holding PLAYSTUDIOS A DL 0001 or generate 41.67% return on investment over 90 days.

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

PLAYSTUDIOS A DL 0001  vs.  Microsoft

PLAYSTUDIOS A DL

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PLAYSTUDIOS A DL 0001 are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, PLAYSTUDIOS reported solid returns over the last few months and may actually be approaching a breakup point.

Microsoft

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Microsoft may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with PLAYSTUDIOS and Microsoft

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

The idea behind PLAYSTUDIOS A DL 0001 and Microsoft 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.