Correlation Between Beta MWIG40TR and HM Inwest

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Can any of the company-specific risk be diversified away by investing in both Beta MWIG40TR and HM Inwest 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 Beta MWIG40TR and HM Inwest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Beta mWIG40TR Portfelowy and HM Inwest SA, you can compare the effects of market volatilities on Beta MWIG40TR and HM Inwest 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 Beta MWIG40TR with a short position of HM Inwest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beta MWIG40TR and HM Inwest.

Diversification Opportunities for Beta MWIG40TR and HM Inwest

-0.27
  Correlation Coefficient

Very good diversification

The 3 months correlation between Beta and HMI is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Beta mWIG40TR Portfelowy and HM Inwest SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HM Inwest SA and Beta MWIG40TR 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 Beta mWIG40TR Portfelowy are associated (or correlated) with HM Inwest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HM Inwest SA has no effect on the direction of Beta MWIG40TR i.e., Beta MWIG40TR and HM Inwest go up and down completely randomly.

Pair Corralation between Beta MWIG40TR and HM Inwest

Assuming the 90 days trading horizon Beta MWIG40TR is expected to generate 2.5 times less return on investment than HM Inwest. But when comparing it to its historical volatility, Beta mWIG40TR Portfelowy is 3.54 times less risky than HM Inwest. It trades about 0.03 of its potential returns per unit of risk. HM Inwest SA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  4,710  in HM Inwest SA on November 28, 2024 and sell it today you would earn a total of  140.00  from holding HM Inwest SA or generate 2.97% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Beta mWIG40TR Portfelowy  vs.  HM Inwest SA

 Performance 
       Timeline  
Beta mWIG40TR Portfelowy 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Beta mWIG40TR Portfelowy are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Beta MWIG40TR sustained solid returns over the last few months and may actually be approaching a breakup point.
HM Inwest SA 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in HM Inwest SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, HM Inwest may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Beta MWIG40TR and HM Inwest Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Beta MWIG40TR and HM Inwest

The main advantage of trading using opposite Beta MWIG40TR and HM Inwest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beta MWIG40TR position performs unexpectedly, HM Inwest 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 HM Inwest will offset losses from the drop in HM Inwest's long position.
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The idea behind Beta mWIG40TR Portfelowy and HM Inwest 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

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