Correlation Between HM Inwest and Bank Millennium

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

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

Diversification Opportunities for HM Inwest and Bank Millennium

-0.36

Correlation Coefficient

HM Inwest  Bank Millennium

Very good diversification

The 3 months correlation between HMI and Bank is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding HM Inwest SA and Bank Millennium SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Millennium SA and HM Inwest 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 HM Inwest SA are associated (or correlated) with Bank Millennium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Millennium SA has no effect on the direction of HM Inwest i.e., HM Inwest and Bank Millennium go up and down completely randomly.

Pair Corralation between HM Inwest and Bank Millennium

Assuming the 90 days trading horizon HM Inwest SA is expected to generate 1.45 times more return on investment than Bank Millennium. However, HM Inwest is 1.45 times more volatile than Bank Millennium SA. It trades about 0.03 of its potential returns per unit of risk. Bank Millennium SA is currently generating about 0.02 per unit of risk. If you would invest  4,190  in HM Inwest SA on September 14, 2024 and sell it today you would earn a total of  420.00  from holding HM Inwest SA or generate 10.02% return on investment over 90 days.

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

HM Inwest SA  vs.  Bank Millennium SA

HM Inwest SA

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HM Inwest SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, HM Inwest reported solid returns over the last few months and may actually be approaching a breakup point.

Bank Millennium SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bank Millennium SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Bank Millennium is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with HM Inwest and Bank Millennium

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

The idea behind HM Inwest SA and Bank Millennium 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.