Correlation Between Budapesti Ingatlan and CIG Pannonia

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

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

Diversification Opportunities for Budapesti Ingatlan and CIG Pannonia

0.73

Correlation Coefficient

Budapesti Ingatlan  CIG Pannonia

Poor diversification

The 3 months correlation between Budapesti and CIG is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Budapesti Ingatlan Hasznositas 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 Budapesti Ingatlan 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 Budapesti Ingatlan Hasznositasi 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 Budapesti Ingatlan i.e., Budapesti Ingatlan and CIG Pannonia go up and down completely randomly.

Pair Corralation between Budapesti Ingatlan and CIG Pannonia

Assuming the 90 days trading horizon Budapesti Ingatlan is expected to generate 1.75 times less return on investment than CIG Pannonia. In addition to that, Budapesti Ingatlan is 1.34 times more volatile than CIG Pannonia Life. It trades about 0.04 of its total potential returns per unit of risk. CIG Pannonia Life is currently generating about 0.08 per unit of volatility. If you would invest  37,100  in CIG Pannonia Life on December 28, 2024 and sell it today you would earn a total of  2,700  from holding CIG Pannonia Life or generate 7.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.83%
Values	Daily Returns

Budapesti Ingatlan Hasznositas  vs.  CIG Pannonia Life

Budapesti Ingatlan

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Budapesti Ingatlan Hasznositasi are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Budapesti Ingatlan is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

CIG Pannonia Life

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CIG Pannonia Life are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, CIG Pannonia may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Budapesti Ingatlan and CIG Pannonia

The main advantage of trading using opposite Budapesti Ingatlan and CIG Pannonia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Budapesti Ingatlan 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 Budapesti Ingatlan Hasznositasi 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.