Correlation Between Microsoft and Bank Polska

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

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

Diversification Opportunities for Microsoft and Bank Polska

0.06

Correlation Coefficient

Microsoft  Bank Polska

Significant diversification

The 3 months correlation between Microsoft and Bank is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Bank Polska Kasa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Polska Kasa 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 Bank Polska. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Polska Kasa has no effect on the direction of Microsoft i.e., Microsoft and Bank Polska go up and down completely randomly.

Pair Corralation between Microsoft and Bank Polska

Given the investment horizon of 90 days Microsoft is expected to generate 0.62 times more return on investment than Bank Polska. However, Microsoft is 1.63 times less risky than Bank Polska. It trades about 0.03 of its potential returns per unit of risk. Bank Polska Kasa is currently generating about -0.05 per unit of risk. If you would invest  43,045  in Microsoft on September 26, 2024 and sell it today you would earn a total of  888.00  from holding Microsoft or generate 2.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Microsoft  vs.  Bank Polska Kasa

Microsoft

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 2 (%) 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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

Bank Polska Kasa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bank Polska Kasa has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Microsoft and Bank Polska

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

The idea behind Microsoft and Bank Polska Kasa 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.