Correlation Between M Food and ING Bank
Can any of the company-specific risk be diversified away by investing in both M Food and ING Bank 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 M Food and ING Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between M Food SA and ING Bank lski, you can compare the effects of market volatilities on M Food and ING Bank 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 M Food with a short position of ING Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of M Food and ING Bank.
Diversification Opportunities for M Food and ING Bank
Very good diversification
The 3 months correlation between MFD and ING is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding M Food SA and ING Bank lski in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ING Bank lski and M Food 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 M Food SA are associated (or correlated) with ING Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ING Bank lski has no effect on the direction of M Food i.e., M Food and ING Bank go up and down completely randomly.
Pair Corralation between M Food and ING Bank
Assuming the 90 days trading horizon M Food SA is expected to under-perform the ING Bank. In addition to that, M Food is 3.14 times more volatile than ING Bank lski. It trades about -0.07 of its total potential returns per unit of risk. ING Bank lski is currently generating about 0.03 per unit of volatility. If you would invest 23,870 in ING Bank lski on September 12, 2024 and sell it today you would earn a total of 1,880 from holding ING Bank lski or generate 7.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 62.6% |
| Values | Daily Returns |
M Food SA vs. ING Bank lski
Performance |
| Timeline |
| M Food SA |
| ING Bank lski |
M Food and ING Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with M Food and ING Bank
The main advantage of trading using opposite M Food and ING Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if M Food position performs unexpectedly, ING Bank 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 ING Bank will offset losses from the drop in ING Bank's long position.| M Food vs. Asseco Business Solutions | M Food vs. Detalion Games SA | M Food vs. Asseco South Eastern | M Food vs. HM Inwest SA |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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