Correlation Between Centrum Finansowe and Bank Millennium

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

Diversification Opportunities for Centrum Finansowe and Bank Millennium

-0.66

Correlation Coefficient

Centrum Finansowe  Bank Millennium

Excellent diversification

The 3 months correlation between Centrum and Bank is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Centrum Finansowe Banku and Bank Millennium SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Millennium 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 Bank Millennium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Millennium SA has no effect on the direction of Centrum Finansowe i.e., Centrum Finansowe and Bank Millennium go up and down completely randomly.

Pair Corralation between Centrum Finansowe and Bank Millennium

Assuming the 90 days trading horizon Centrum Finansowe Banku is expected to under-perform the Bank Millennium. But the stock apears to be less risky and, when comparing its historical volatility, Centrum Finansowe Banku is 1.02 times less risky than Bank Millennium. The stock trades about -0.07 of its potential returns per unit of risk. The Bank Millennium SA is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest  890.00  in Bank Millennium SA on December 30, 2024 and sell it today you would earn a total of  579.00  from holding Bank Millennium SA or generate 65.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Centrum Finansowe Banku  vs.  Bank Millennium 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.

Bank Millennium SA

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Bank Millennium SA are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Bank Millennium reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Centrum Finansowe and Bank Millennium

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

The idea behind Centrum Finansowe Banku and Bank Millennium 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.

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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.