Correlation Between Centrum Finansowe and Action SA

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

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

Diversification Opportunities for Centrum Finansowe and Action SA

-0.39

Correlation Coefficient

Centrum Finansowe  Action SA

Very good diversification

The 3 months correlation between Centrum and Action is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Centrum Finansowe Banku and Action SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Action SA and Centrum Finansowe 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 Centrum Finansowe Banku are associated (or correlated) with Action SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Action SA has no effect on the direction of Centrum Finansowe i.e., Centrum Finansowe and Action SA go up and down completely randomly.

Pair Corralation between Centrum Finansowe and Action SA

Assuming the 90 days trading horizon Centrum Finansowe Banku is expected to under-perform the Action SA. In addition to that, Centrum Finansowe is 1.93 times more volatile than Action SA. It trades about -0.07 of its total potential returns per unit of risk. Action SA is currently generating about 0.04 per unit of volatility. If you would invest  1,956  in Action SA on December 25, 2024 and sell it today you would earn a total of  40.00  from holding Action SA or generate 2.04% return on investment over 90 days.

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

Centrum Finansowe Banku  vs.  Action SA

Centrum Finansowe Banku

Risk-Adjusted Performance

Very Weak

Over the last 90 days Centrum Finansowe Banku has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Action SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Action SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Action SA 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 Centrum Finansowe and Action SA

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

The idea behind Centrum Finansowe Banku and Action 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.

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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.