Correlation Between Microsoft and Inpost SA

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

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

Diversification Opportunities for Microsoft and Inpost SA

-0.66

Correlation Coefficient

Microsoft  Inpost SA

Excellent diversification

The 3 months correlation between Microsoft and Inpost is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Inpost SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inpost SA 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 Inpost SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inpost SA has no effect on the direction of Microsoft i.e., Microsoft and Inpost SA go up and down completely randomly.

Pair Corralation between Microsoft and Inpost SA

Given the investment horizon of 90 days Microsoft is expected to generate 0.75 times more return on investment than Inpost SA. However, Microsoft is 1.34 times less risky than Inpost SA. It trades about 0.08 of its potential returns per unit of risk. Inpost SA is currently generating about -0.05 per unit of risk. If you would invest  44,064  in Microsoft on April 29, 2025 and sell it today you would earn a total of  7,186  from holding Microsoft or generate 16.31% return on investment over 90 days.

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

Microsoft  vs.  Inpost SA

Microsoft

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Microsoft unveiled solid returns over the last few months and may actually be approaching a breakup point.

Inpost SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Inpost SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Microsoft and Inpost SA

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

The idea behind Microsoft and Inpost SA 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.