Correlation Between Microsoft and Panion BF

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

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

Diversification Opportunities for Microsoft and Panion BF

-0.23

Correlation Coefficient

Microsoft  Panion BF

Very good diversification

The 3 months correlation between Microsoft and Panion is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Panion BF Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Panion BF Biotech 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 Panion BF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Panion BF Biotech has no effect on the direction of Microsoft i.e., Microsoft and Panion BF go up and down completely randomly.

Pair Corralation between Microsoft and Panion BF

Given the investment horizon of 90 days Microsoft is expected to under-perform the Panion BF. In addition to that, Microsoft is 1.14 times more volatile than Panion BF Biotech. It trades about -0.11 of its total potential returns per unit of risk. Panion BF Biotech is currently generating about -0.03 per unit of volatility. If you would invest  8,220  in Panion BF Biotech on December 30, 2024 and sell it today you would lose (260.00) from holding Panion BF Biotech or give up 3.16% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	91.94%
Values	Daily Returns

Microsoft  vs.  Panion BF Biotech

Microsoft

Risk-Adjusted Performance

Very Weak

Over the last 90 days Microsoft has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Panion BF Biotech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Panion BF Biotech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Panion BF is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Microsoft and Panion BF

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

The idea behind Microsoft and Panion BF Biotech 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.