Correlation Between MBank SA and Powszechny Zaklad

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

By analyzing existing cross correlation between mBank SA and Powszechny Zaklad Ubezpieczen, you can compare the effects of market volatilities on MBank SA and Powszechny Zaklad 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 MBank SA with a short position of Powszechny Zaklad. Check out your portfolio center. Please also check ongoing floating volatility patterns of MBank SA and Powszechny Zaklad.

Diversification Opportunities for MBank SA and Powszechny Zaklad

-0.38

Correlation Coefficient

MBank SA  Powszechny Zaklad

Very good diversification

The 3 months correlation between MBank and Powszechny is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding mBank SA and Powszechny Zaklad Ubezpieczen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Powszechny Zaklad and MBank SA 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 mBank SA are associated (or correlated) with Powszechny Zaklad. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Powszechny Zaklad has no effect on the direction of MBank SA i.e., MBank SA and Powszechny Zaklad go up and down completely randomly.

Pair Corralation between MBank SA and Powszechny Zaklad

Assuming the 90 days trading horizon MBank SA is expected to generate 2.64 times less return on investment than Powszechny Zaklad. In addition to that, MBank SA is 1.58 times more volatile than Powszechny Zaklad Ubezpieczen. It trades about 0.05 of its total potential returns per unit of risk. Powszechny Zaklad Ubezpieczen is currently generating about 0.23 per unit of volatility. If you would invest  4,296  in Powszechny Zaklad Ubezpieczen on September 27, 2024 and sell it today you would earn a total of  277.00  from holding Powszechny Zaklad Ubezpieczen or generate 6.45% return on investment over 90 days.

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

mBank SA  vs.  Powszechny Zaklad Ubezpieczen

mBank SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days mBank SA 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.

Powszechny Zaklad

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Powszechny Zaklad Ubezpieczen are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Powszechny Zaklad 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 MBank SA and Powszechny Zaklad

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

The idea behind mBank SA and Powszechny Zaklad Ubezpieczen 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.