Correlation Between Central Europe and Financial

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

By analyzing existing cross correlation between Central Europe Russia and Financial 15 Split, you can compare the effects of market volatilities on Central Europe and Financial 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 Central Europe with a short position of Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Europe and Financial.

Diversification Opportunities for Central Europe and Financial

-0.47

Correlation Coefficient

Central Europe  Financial

Very good diversification

The 3 months correlation between Central and Financial is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Central Europe Russia and Financial 15 Split in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financial 15 Split and Central Europe 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 Central Europe Russia are associated (or correlated) with Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financial 15 Split has no effect on the direction of Central Europe i.e., Central Europe and Financial go up and down completely randomly.

Pair Corralation between Central Europe and Financial

Considering the 90-day investment horizon Central Europe Russia is expected to generate 1.23 times more return on investment than Financial. However, Central Europe is 1.23 times more volatile than Financial 15 Split. It trades about 0.16 of its potential returns per unit of risk. Financial 15 Split is currently generating about -0.03 per unit of risk. If you would invest  1,127  in Central Europe Russia on December 30, 2024 and sell it today you would earn a total of  353.00  from holding Central Europe Russia or generate 31.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.77%
Values	Daily Returns

Central Europe Russia  vs.  Financial 15 Split

Central Europe Russia

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Central Europe Russia are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather fragile technical and fundamental indicators, Central Europe exhibited solid returns over the last few months and may actually be approaching a breakup point.

Financial 15 Split

Risk-Adjusted Performance

Very Weak

Over the last 90 days Financial 15 Split has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Central Europe and Financial

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

The idea behind Central Europe Russia and Financial 15 Split 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 Global Correlations module to find global opportunities by holding instruments from different markets.