Correlation Between Mermeren Kombinat and Viohalco

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

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

Diversification Opportunities for Mermeren Kombinat and Viohalco

0.3

Correlation Coefficient

Mermeren Kombinat  Viohalco

Weak diversification

The 3 months correlation between Mermeren and Viohalco is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Mermeren Kombinat AD and Viohalco SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viohalco SA and Mermeren Kombinat 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 Mermeren Kombinat AD are associated (or correlated) with Viohalco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viohalco SA has no effect on the direction of Mermeren Kombinat i.e., Mermeren Kombinat and Viohalco go up and down completely randomly.

Pair Corralation between Mermeren Kombinat and Viohalco

Assuming the 90 days trading horizon Mermeren Kombinat AD is expected to generate 2.15 times more return on investment than Viohalco. However, Mermeren Kombinat is 2.15 times more volatile than Viohalco SA. It trades about 0.02 of its potential returns per unit of risk. Viohalco SA is currently generating about 0.01 per unit of risk. If you would invest  4,000  in Mermeren Kombinat AD on September 16, 2024 and sell it today you would earn a total of  0.00  from holding Mermeren Kombinat AD or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Mermeren Kombinat AD  vs.  Viohalco SA

Mermeren Kombinat

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mermeren Kombinat AD are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Mermeren Kombinat is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Viohalco SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Viohalco SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Viohalco is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Mermeren Kombinat and Viohalco

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

The idea behind Mermeren Kombinat AD and Viohalco 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.