Correlation Between ALTEO Energiaszolgalta and CIG Pannonia

Can any of the company-specific risk be diversified away by investing in both ALTEO Energiaszolgalta and CIG Pannonia 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 ALTEO Energiaszolgalta and CIG Pannonia into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ALTEO Energiaszolgaltato Nyrt and CIG Pannonia Life, you can compare the effects of market volatilities on ALTEO Energiaszolgalta and CIG Pannonia 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 ALTEO Energiaszolgalta with a short position of CIG Pannonia. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALTEO Energiaszolgalta and CIG Pannonia.

Diversification Opportunities for ALTEO Energiaszolgalta and CIG Pannonia

-0.72

Correlation Coefficient

ALTEO Energiaszolgalta  CIG Pannonia

Pay attention - limited upside

The 3 months correlation between ALTEO and CIG is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding ALTEO Energiaszolgaltato Nyrt and CIG Pannonia Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIG Pannonia Life and ALTEO Energiaszolgalta 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 ALTEO Energiaszolgaltato Nyrt are associated (or correlated) with CIG Pannonia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIG Pannonia Life has no effect on the direction of ALTEO Energiaszolgalta i.e., ALTEO Energiaszolgalta and CIG Pannonia go up and down completely randomly.

Pair Corralation between ALTEO Energiaszolgalta and CIG Pannonia

Assuming the 90 days trading horizon ALTEO Energiaszolgaltato Nyrt is expected to under-perform the CIG Pannonia. But the stock apears to be less risky and, when comparing its historical volatility, ALTEO Energiaszolgaltato Nyrt is 1.5 times less risky than CIG Pannonia. The stock trades about -0.28 of its potential returns per unit of risk. The CIG Pannonia Life is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  35,600  in CIG Pannonia Life on September 15, 2024 and sell it today you would earn a total of  1,400  from holding CIG Pannonia Life or generate 3.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

ALTEO Energiaszolgaltato Nyrt  vs.  CIG Pannonia Life

ALTEO Energiaszolgalta

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ALTEO Energiaszolgaltato Nyrt has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

CIG Pannonia Life

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CIG Pannonia Life are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, CIG Pannonia exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ALTEO Energiaszolgalta and CIG Pannonia

The main advantage of trading using opposite ALTEO Energiaszolgalta and CIG Pannonia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALTEO Energiaszolgalta position performs unexpectedly, CIG Pannonia 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 CIG Pannonia will offset losses from the drop in CIG Pannonia's long position.

The idea behind ALTEO Energiaszolgaltato Nyrt and CIG Pannonia Life 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.