Correlation Between WSE WIG and SOFTWARE MANSION
Can any of the company-specific risk be diversified away by investing in both WSE WIG and SOFTWARE MANSION 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 WSE WIG and SOFTWARE MANSION into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WSE WIG INDEX and SOFTWARE MANSION SPOLKA, you can compare the effects of market volatilities on WSE WIG and SOFTWARE MANSION 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 WSE WIG with a short position of SOFTWARE MANSION. Check out your portfolio center. Please also check ongoing floating volatility patterns of WSE WIG and SOFTWARE MANSION.
Diversification Opportunities for WSE WIG and SOFTWARE MANSION
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between WSE and SOFTWARE is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding WSE WIG INDEX and SOFTWARE MANSION SPOLKA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOFTWARE MANSION SPOLKA and WSE WIG 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 WSE WIG INDEX are associated (or correlated) with SOFTWARE MANSION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOFTWARE MANSION SPOLKA has no effect on the direction of WSE WIG i.e., WSE WIG and SOFTWARE MANSION go up and down completely randomly.
Pair Corralation between WSE WIG and SOFTWARE MANSION
Assuming the 90 days trading horizon WSE WIG is expected to generate 8.86 times less return on investment than SOFTWARE MANSION. But when comparing it to its historical volatility, WSE WIG INDEX is 3.94 times less risky than SOFTWARE MANSION. It trades about 0.02 of its potential returns per unit of risk. SOFTWARE MANSION SPOLKA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,430 in SOFTWARE MANSION SPOLKA on August 29, 2024 and sell it today you would earn a total of 570.00 from holding SOFTWARE MANSION SPOLKA or generate 23.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 90.24% |
| Values | Daily Returns |
WSE WIG INDEX vs. SOFTWARE MANSION SPOLKA
Performance |
| Timeline |
WSE WIG and SOFTWARE MANSION Volatility Contrast
Predicted Return Density |
| Returns |
WSE WIG INDEX
Pair trading matchups for WSE WIG
SOFTWARE MANSION SPOLKA
Pair trading matchups for SOFTWARE MANSION
Pair Trading with WSE WIG and SOFTWARE MANSION
The main advantage of trading using opposite WSE WIG and SOFTWARE MANSION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WSE WIG position performs unexpectedly, SOFTWARE MANSION 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 SOFTWARE MANSION will offset losses from the drop in SOFTWARE MANSION's long position.| WSE WIG vs. GreenX Metals | WSE WIG vs. Intersport Polska SA | WSE WIG vs. MCI Management SA | WSE WIG vs. Centrum Finansowe Banku |
| SOFTWARE MANSION vs. Quantum Software SA | SOFTWARE MANSION vs. Creotech Instruments SA | SOFTWARE MANSION vs. New Tech Venture | SOFTWARE MANSION vs. Intersport Polska 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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