Correlation Between Centrum Finansowe and ED Invest

Can any of the company-specific risk be diversified away by investing in both Centrum Finansowe and ED Invest 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 ED Invest 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 ED Invest SA, you can compare the effects of market volatilities on Centrum Finansowe and ED Invest 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 ED Invest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centrum Finansowe and ED Invest.

Diversification Opportunities for Centrum Finansowe and ED Invest

0.03

Correlation Coefficient

Centrum Finansowe  ED Invest

Significant diversification

The 3 months correlation between Centrum and EDI is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Centrum Finansowe Banku and ED Invest SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ED Invest 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 ED Invest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ED Invest SA has no effect on the direction of Centrum Finansowe i.e., Centrum Finansowe and ED Invest go up and down completely randomly.

Pair Corralation between Centrum Finansowe and ED Invest

Assuming the 90 days trading horizon Centrum Finansowe Banku is expected to generate 0.87 times more return on investment than ED Invest. However, Centrum Finansowe Banku is 1.14 times less risky than ED Invest. It trades about 0.09 of its potential returns per unit of risk. ED Invest SA is currently generating about 0.02 per unit of risk. If you would invest  525.00  in Centrum Finansowe Banku on September 14, 2024 and sell it today you would earn a total of  60.00  from holding Centrum Finansowe Banku or generate 11.43% return on investment over 90 days.

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

Centrum Finansowe Banku  vs.  ED Invest SA

Centrum Finansowe Banku

Risk-Adjusted Performance

6 of 100

Modest

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

ED Invest SA

Risk-Adjusted Performance

1 of 100

Weak

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

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

The idea behind Centrum Finansowe Banku and ED Invest 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.