Correlation Between CEZ As and Wirtualna Polska

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

By analyzing existing cross correlation between CEZ as and Wirtualna Polska Holding, you can compare the effects of market volatilities on CEZ As and Wirtualna Polska 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 Wirtualna Polska. Check out your portfolio center. Please also check ongoing floating volatility patterns of CEZ As and Wirtualna Polska.

Diversification Opportunities for CEZ As and Wirtualna Polska

-0.34

Correlation Coefficient

CEZ As  Wirtualna Polska

Very good diversification

The 3 months correlation between CEZ and Wirtualna is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding CEZ as and Wirtualna Polska Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wirtualna Polska Holding 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 Wirtualna Polska. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wirtualna Polska Holding has no effect on the direction of CEZ As i.e., CEZ As and Wirtualna Polska go up and down completely randomly.

Pair Corralation between CEZ As and Wirtualna Polska

Assuming the 90 days trading horizon CEZ as is expected to generate 1.2 times more return on investment than Wirtualna Polska. However, CEZ As is 1.2 times more volatile than Wirtualna Polska Holding. It trades about 0.1 of its potential returns per unit of risk. Wirtualna Polska Holding is currently generating about 0.01 per unit of risk. If you would invest  16,180  in CEZ as on December 22, 2024 and sell it today you would earn a total of  1,820  from holding CEZ as or generate 11.25% return on investment over 90 days.

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

CEZ as  vs.  Wirtualna Polska Holding

CEZ as

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CEZ as are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, CEZ As may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Wirtualna Polska Holding

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wirtualna Polska Holding are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Wirtualna Polska 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 Wirtualna Polska

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

The idea behind CEZ as and Wirtualna Polska Holding 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.