Correlation Between CIG Pannonia and Budapesti Ingatlan

Can any of the company-specific risk be diversified away by investing in both CIG Pannonia and Budapesti Ingatlan 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 CIG Pannonia and Budapesti Ingatlan into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CIG Pannonia Life and Budapesti Ingatlan Hasznositasi, you can compare the effects of market volatilities on CIG Pannonia and Budapesti Ingatlan 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 CIG Pannonia with a short position of Budapesti Ingatlan. Check out your portfolio center. Please also check ongoing floating volatility patterns of CIG Pannonia and Budapesti Ingatlan.

Diversification Opportunities for CIG Pannonia and Budapesti Ingatlan

0.77

Correlation Coefficient

CIG Pannonia  Budapesti Ingatlan

Poor diversification

The 3 months correlation between CIG and Budapesti is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding CIG Pannonia Life and Budapesti Ingatlan Hasznositas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Budapesti Ingatlan and CIG Pannonia 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 CIG Pannonia Life are associated (or correlated) with Budapesti Ingatlan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Budapesti Ingatlan has no effect on the direction of CIG Pannonia i.e., CIG Pannonia and Budapesti Ingatlan go up and down completely randomly.

Pair Corralation between CIG Pannonia and Budapesti Ingatlan

Assuming the 90 days trading horizon CIG Pannonia Life is expected to generate 0.77 times more return on investment than Budapesti Ingatlan. However, CIG Pannonia Life is 1.3 times less risky than Budapesti Ingatlan. It trades about 0.19 of its potential returns per unit of risk. Budapesti Ingatlan Hasznositasi is currently generating about 0.07 per unit of risk. If you would invest  31,600  in CIG Pannonia Life on September 15, 2024 and sell it today you would earn a total of  5,400  from holding CIG Pannonia Life or generate 17.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

CIG Pannonia Life  vs.  Budapesti Ingatlan Hasznositas

CIG Pannonia Life

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CIG Pannonia Life are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, CIG Pannonia exhibited solid returns over the last few months and may actually be approaching a breakup point.

Budapesti Ingatlan

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Budapesti Ingatlan Hasznositasi are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Budapesti Ingatlan may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with CIG Pannonia and Budapesti Ingatlan

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

The idea behind CIG Pannonia Life and Budapesti Ingatlan Hasznositasi 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.