Correlation Between PT Bank and Microsoft

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

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

Diversification Opportunities for PT Bank and Microsoft

0.68

Correlation Coefficient

PT Bank  Microsoft

Poor diversification

The 3 months correlation between BYRA and Microsoft is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft and PT Bank 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 PT Bank Rakyat 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 PT Bank i.e., PT Bank and Microsoft go up and down completely randomly.

Pair Corralation between PT Bank and Microsoft

Assuming the 90 days trading horizon PT Bank Rakyat is expected to generate 3.48 times more return on investment than Microsoft. However, PT Bank is 3.48 times more volatile than Microsoft. It trades about 0.04 of its potential returns per unit of risk. Microsoft is currently generating about 0.11 per unit of risk. If you would invest  21.00  in PT Bank Rakyat on March 21, 2025 and sell it today you would lose (1.00) from holding PT Bank Rakyat or give up 4.76% of portfolio value over 90 days.

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

PT Bank Rakyat  vs.  Microsoft

PT Bank Rakyat

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PT Bank Rakyat are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PT Bank reported solid returns over the last few months and may actually be approaching a breakup point.

Microsoft

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Microsoft unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Bank and Microsoft

The main advantage of trading using opposite PT Bank and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank 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 PT Bank Rakyat 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.

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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.