Correlation Between Carlson Investments and Bank Millennium

Can any of the company-specific risk be diversified away by investing in both Carlson Investments and Bank Millennium 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 Carlson Investments and Bank Millennium into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Carlson Investments SA and Bank Millennium SA, you can compare the effects of market volatilities on Carlson Investments and Bank Millennium 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 Carlson Investments with a short position of Bank Millennium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carlson Investments and Bank Millennium.

Diversification Opportunities for Carlson Investments and Bank Millennium

0.27

Correlation Coefficient

Carlson Investments  Bank Millennium

Modest diversification

The 3 months correlation between Carlson and Bank is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Carlson Investments SA and Bank Millennium SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Millennium SA and Carlson Investments 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 Carlson Investments SA are associated (or correlated) with Bank Millennium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Millennium SA has no effect on the direction of Carlson Investments i.e., Carlson Investments and Bank Millennium go up and down completely randomly.

Pair Corralation between Carlson Investments and Bank Millennium

Assuming the 90 days trading horizon Carlson Investments is expected to generate 1.35 times less return on investment than Bank Millennium. In addition to that, Carlson Investments is 2.99 times more volatile than Bank Millennium SA. It trades about 0.08 of its total potential returns per unit of risk. Bank Millennium SA is currently generating about 0.34 per unit of volatility. If you would invest  868.00  in Bank Millennium SA on December 21, 2024 and sell it today you would earn a total of  481.00  from holding Bank Millennium SA or generate 55.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Carlson Investments SA  vs.  Bank Millennium SA

Carlson Investments

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Carlson Investments SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Carlson Investments reported solid returns over the last few months and may actually be approaching a breakup point.

Bank Millennium SA

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Bank Millennium SA are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Bank Millennium reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Carlson Investments and Bank Millennium

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

The idea behind Carlson Investments SA and Bank Millennium SA 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.