Correlation Between Kofola CeskoSlovensko and MT 1997

Can any of the company-specific risk be diversified away by investing in both Kofola CeskoSlovensko and MT 1997 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 Kofola CeskoSlovensko and MT 1997 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kofola CeskoSlovensko as and MT 1997 AS, you can compare the effects of market volatilities on Kofola CeskoSlovensko and MT 1997 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 Kofola CeskoSlovensko with a short position of MT 1997. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kofola CeskoSlovensko and MT 1997.

Diversification Opportunities for Kofola CeskoSlovensko and MT 1997

-0.74

Correlation Coefficient

Kofola CeskoSlovensko  MT 1997

Pay attention - limited upside

The 3 months correlation between Kofola and KLIKY is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Kofola CeskoSlovensko as and MT 1997 AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MT 1997 AS and Kofola CeskoSlovensko 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 Kofola CeskoSlovensko as are associated (or correlated) with MT 1997. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MT 1997 AS has no effect on the direction of Kofola CeskoSlovensko i.e., Kofola CeskoSlovensko and MT 1997 go up and down completely randomly.

Pair Corralation between Kofola CeskoSlovensko and MT 1997

Assuming the 90 days trading horizon Kofola CeskoSlovensko as is expected to generate 1.7 times more return on investment than MT 1997. However, Kofola CeskoSlovensko is 1.7 times more volatile than MT 1997 AS. It trades about 0.5 of its potential returns per unit of risk. MT 1997 AS is currently generating about -0.24 per unit of risk. If you would invest  33,300  in Kofola CeskoSlovensko as on September 2, 2024 and sell it today you would earn a total of  4,700  from holding Kofola CeskoSlovensko as or generate 14.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Kofola CeskoSlovensko as  vs.  MT 1997 AS

Kofola CeskoSlovensko

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kofola CeskoSlovensko as are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Kofola CeskoSlovensko reported solid returns over the last few months and may actually be approaching a breakup point.

MT 1997 AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MT 1997 AS has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Kofola CeskoSlovensko and MT 1997

The main advantage of trading using opposite Kofola CeskoSlovensko and MT 1997 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kofola CeskoSlovensko position performs unexpectedly, MT 1997 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 MT 1997 will offset losses from the drop in MT 1997's long position.

The idea behind Kofola CeskoSlovensko as and MT 1997 AS 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.