Correlation Between Centrum Finansowe and Monnari Trade

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

Diversification Opportunities for Centrum Finansowe and Monnari Trade

-0.11

Correlation Coefficient

Centrum Finansowe  Monnari Trade

Good diversification

The 3 months correlation between Centrum and Monnari is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Centrum Finansowe Banku and Monnari Trade SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monnari Trade 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 Monnari Trade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monnari Trade SA has no effect on the direction of Centrum Finansowe i.e., Centrum Finansowe and Monnari Trade go up and down completely randomly.

Pair Corralation between Centrum Finansowe and Monnari Trade

Assuming the 90 days trading horizon Centrum Finansowe Banku is expected to under-perform the Monnari Trade. In addition to that, Centrum Finansowe is 1.04 times more volatile than Monnari Trade SA. It trades about -0.18 of its total potential returns per unit of risk. Monnari Trade SA is currently generating about -0.14 per unit of volatility. If you would invest  514.00  in Monnari Trade SA on October 27, 2024 and sell it today you would lose (24.00) from holding Monnari Trade SA or give up 4.67% of portfolio value over 90 days.

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

Centrum Finansowe Banku  vs.  Monnari Trade SA

Centrum Finansowe Banku

Risk-Adjusted Performance

0 of 100

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 relatively invariable basic indicators, Centrum Finansowe is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Monnari Trade SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Monnari Trade SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Centrum Finansowe and Monnari Trade

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

The idea behind Centrum Finansowe Banku and Monnari Trade 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.