Correlation Between MBank SA and Biztech Konsulting
Can any of the company-specific risk be diversified away by investing in both MBank SA and Biztech Konsulting 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 Biztech Konsulting into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between mBank SA and Biztech Konsulting SA, you can compare the effects of market volatilities on MBank SA and Biztech Konsulting 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 Biztech Konsulting. Check out your portfolio center. Please also check ongoing floating volatility patterns of MBank SA and Biztech Konsulting.
Diversification Opportunities for MBank SA and Biztech Konsulting
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between MBank and Biztech is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding mBank SA and Biztech Konsulting SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biztech Konsulting 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 Biztech Konsulting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biztech Konsulting has no effect on the direction of MBank SA i.e., MBank SA and Biztech Konsulting go up and down completely randomly.
Pair Corralation between MBank SA and Biztech Konsulting
Assuming the 90 days trading horizon mBank SA is expected to generate 0.42 times more return on investment than Biztech Konsulting. However, mBank SA is 2.4 times less risky than Biztech Konsulting. It trades about 0.45 of its potential returns per unit of risk. Biztech Konsulting SA is currently generating about -0.08 per unit of risk. If you would invest 59,800 in mBank SA on November 28, 2024 and sell it today you would earn a total of 13,300 from holding mBank SA or generate 22.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
mBank SA vs. Biztech Konsulting SA
Performance |
| Timeline |
| mBank SA |
| Biztech Konsulting |
MBank SA and Biztech Konsulting Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MBank SA and Biztech Konsulting
The main advantage of trading using opposite MBank SA and Biztech Konsulting positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MBank SA position performs unexpectedly, Biztech Konsulting 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 Biztech Konsulting will offset losses from the drop in Biztech Konsulting's long position.| MBank SA vs. Road Studio SA | MBank SA vs. Noble Financials SA | MBank SA vs. LSI Software SA | MBank SA vs. GreenX Metals |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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