Correlation Between Kogeneracja and Centrum Finansowe

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

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

Diversification Opportunities for Kogeneracja and Centrum Finansowe

0.26

Correlation Coefficient

Kogeneracja  Centrum Finansowe

Modest diversification

The 3 months correlation between Kogeneracja and Centrum is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Kogeneracja 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 Kogeneracja 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 Kogeneracja 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 Kogeneracja i.e., Kogeneracja and Centrum Finansowe go up and down completely randomly.

Pair Corralation between Kogeneracja and Centrum Finansowe

Assuming the 90 days trading horizon Kogeneracja is expected to generate 14.46 times less return on investment than Centrum Finansowe. In addition to that, Kogeneracja is 1.02 times more volatile than Centrum Finansowe Banku. It trades about 0.01 of its total potential returns per unit of risk. Centrum Finansowe Banku is currently generating about 0.11 per unit of volatility. If you would invest  505.00  in Centrum Finansowe Banku on September 12, 2024 and sell it today you would earn a total of  80.00  from holding Centrum Finansowe Banku or generate 15.84% return on investment over 90 days.

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

Kogeneracja SA  vs.  Centrum Finansowe Banku

Kogeneracja SA

Risk-Adjusted Performance

0 of 100

Weak

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

Centrum Finansowe Banku

Risk-Adjusted Performance

8 of 100

OK

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

Pair Trading with Kogeneracja and Centrum Finansowe

The main advantage of trading using opposite Kogeneracja and Centrum Finansowe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kogeneracja 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 Kogeneracja 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.