Correlation Between CEZ As and MCI Management
Can any of the company-specific risk be diversified away by investing in both CEZ As and MCI Management 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 CEZ As and MCI Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CEZ as and MCI Management SA, you can compare the effects of market volatilities on CEZ As and MCI Management 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 CEZ As with a short position of MCI Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of CEZ As and MCI Management.
Diversification Opportunities for CEZ As and MCI Management
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CEZ and MCI is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding CEZ as and MCI Management SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCI Management SA and CEZ As 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 CEZ as are associated (or correlated) with MCI Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCI Management SA has no effect on the direction of CEZ As i.e., CEZ As and MCI Management go up and down completely randomly.
Pair Corralation between CEZ As and MCI Management
Assuming the 90 days trading horizon CEZ as is expected to generate 1.37 times more return on investment than MCI Management. However, CEZ As is 1.37 times more volatile than MCI Management SA. It trades about 0.18 of its potential returns per unit of risk. MCI Management SA is currently generating about 0.18 per unit of risk. If you would invest 16,500 in CEZ as on November 3, 2024 and sell it today you would earn a total of 1,440 from holding CEZ as or generate 8.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CEZ as vs. MCI Management SA
Performance |
| Timeline |
| CEZ as |
| MCI Management SA |
CEZ As and MCI Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CEZ As and MCI Management
The main advantage of trading using opposite CEZ As and MCI Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CEZ As position performs unexpectedly, MCI Management 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 MCI Management will offset losses from the drop in MCI Management's long position.| CEZ As vs. Gremi Media SA | CEZ As vs. ING Bank lski | CEZ As vs. Varsav Game Studios | CEZ As vs. True Games Syndicate |
Check out your portfolio center.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 Stocks Directory module to find actively traded stocks across global markets.
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