Correlation Between CEZ As and Bank Ochrony

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

By analyzing existing cross correlation between CEZ as and Bank Ochrony rodowiska, you can compare the effects of market volatilities on CEZ As and Bank Ochrony 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 CEZ As with a short position of Bank Ochrony. Check out your portfolio center. Please also check ongoing floating volatility patterns of CEZ As and Bank Ochrony.

Diversification Opportunities for CEZ As and Bank Ochrony

-0.6

Correlation Coefficient

CEZ As  Bank Ochrony

Excellent diversification

The 3 months correlation between CEZ and Bank is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding CEZ as and Bank Ochrony rodowiska in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Ochrony rodowiska and CEZ As 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 CEZ as are associated (or correlated) with Bank Ochrony. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Ochrony rodowiska has no effect on the direction of CEZ As i.e., CEZ As and Bank Ochrony go up and down completely randomly.

Pair Corralation between CEZ As and Bank Ochrony

Assuming the 90 days trading horizon CEZ as is expected to generate 0.97 times more return on investment than Bank Ochrony. However, CEZ as is 1.03 times less risky than Bank Ochrony. It trades about 0.12 of its potential returns per unit of risk. Bank Ochrony rodowiska is currently generating about 0.01 per unit of risk. If you would invest  14,650  in CEZ as on October 21, 2024 and sell it today you would earn a total of  2,160  from holding CEZ as or generate 14.74% return on investment over 90 days.

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

CEZ as  vs.  Bank Ochrony rodowiska

CEZ as

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CEZ as are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, CEZ As reported solid returns over the last few months and may actually be approaching a breakup point.

Bank Ochrony rodowiska

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bank Ochrony rodowiska has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Bank Ochrony is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with CEZ As and Bank Ochrony

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

The idea behind CEZ as and Bank Ochrony rodowiska 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.