Correlation Between Bank Polska and M Food
Can any of the company-specific risk be diversified away by investing in both Bank Polska and M Food 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 Bank Polska and M Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Polska Kasa and M Food SA, you can compare the effects of market volatilities on Bank Polska and M Food 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 Bank Polska with a short position of M Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Polska and M Food.
Diversification Opportunities for Bank Polska and M Food
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and MFD is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Bank Polska Kasa and M Food SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on M Food SA and Bank Polska 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 Bank Polska Kasa are associated (or correlated) with M Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of M Food SA has no effect on the direction of Bank Polska i.e., Bank Polska and M Food go up and down completely randomly.
Pair Corralation between Bank Polska and M Food
Assuming the 90 days trading horizon Bank Polska Kasa is expected to generate 0.33 times more return on investment than M Food. However, Bank Polska Kasa is 2.99 times less risky than M Food. It trades about -0.06 of its potential returns per unit of risk. M Food SA is currently generating about -0.07 per unit of risk. If you would invest 17,635 in Bank Polska Kasa on January 12, 2025 and sell it today you would lose (1,135) from holding Bank Polska Kasa or give up 6.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 54.55% |
| Values | Daily Returns |
Bank Polska Kasa vs. M Food SA
Performance |
| Timeline |
| Bank Polska Kasa |
| M Food SA |
Bank Polska and M Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Polska and M Food
The main advantage of trading using opposite Bank Polska and M Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Polska position performs unexpectedly, M Food 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 M Food will offset losses from the drop in M Food's long position.| Bank Polska vs. Examobile SA | Bank Polska vs. MW Trade SA | Bank Polska vs. Immobile | Bank Polska vs. Investment Friends Capital |
| M Food vs. PMPG Polskie Media | M Food vs. Marie Brizard Wine | M Food vs. Medicofarma Biotech SA | M Food vs. ING Bank lski |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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