Correlation Between Biztech Konsulting and Centrum Finansowe

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

By analyzing existing cross correlation between Biztech Konsulting SA and Centrum Finansowe Banku, you can compare the effects of market volatilities on Biztech Konsulting and Centrum Finansowe 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 Biztech Konsulting with a short position of Centrum Finansowe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biztech Konsulting and Centrum Finansowe.

Diversification Opportunities for Biztech Konsulting and Centrum Finansowe

0.32

Correlation Coefficient

Biztech Konsulting  Centrum Finansowe

Weak diversification

The 3 months correlation between Biztech and Centrum is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Biztech Konsulting SA and Centrum Finansowe Banku in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centrum Finansowe Banku and Biztech Konsulting 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 Biztech Konsulting SA are associated (or correlated) with Centrum Finansowe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centrum Finansowe Banku has no effect on the direction of Biztech Konsulting i.e., Biztech Konsulting and Centrum Finansowe go up and down completely randomly.

Pair Corralation between Biztech Konsulting and Centrum Finansowe

Assuming the 90 days trading horizon Biztech Konsulting SA is expected to generate 1.89 times more return on investment than Centrum Finansowe. However, Biztech Konsulting is 1.89 times more volatile than Centrum Finansowe Banku. It trades about 0.22 of its potential returns per unit of risk. Centrum Finansowe Banku is currently generating about 0.01 per unit of risk. If you would invest  16.00  in Biztech Konsulting SA on September 27, 2024 and sell it today you would earn a total of  3.00  from holding Biztech Konsulting SA or generate 18.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Biztech Konsulting SA  vs.  Centrum Finansowe Banku

Biztech Konsulting

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Biztech Konsulting SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Biztech Konsulting reported solid returns over the last few months and may actually be approaching a breakup point.

Centrum Finansowe Banku

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Centrum Finansowe Banku are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Centrum Finansowe may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Biztech Konsulting and Centrum Finansowe

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

The idea behind Biztech Konsulting SA and Centrum Finansowe Banku 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.