Correlation Between Colt CZ and Komercni Banka

Can any of the company-specific risk be diversified away by investing in both Colt CZ and Komercni Banka 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 Colt CZ and Komercni Banka into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Colt CZ Group and Komercni Banka AS, you can compare the effects of market volatilities on Colt CZ and Komercni Banka 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 Colt CZ with a short position of Komercni Banka. Check out your portfolio center. Please also check ongoing floating volatility patterns of Colt CZ and Komercni Banka.

Diversification Opportunities for Colt CZ and Komercni Banka

0.92

Correlation Coefficient

Colt CZ  Komercni Banka

Almost no diversification

The 3 months correlation between Colt and Komercni is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Colt CZ Group and Komercni Banka AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Komercni Banka AS and Colt CZ 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 Colt CZ Group are associated (or correlated) with Komercni Banka. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Komercni Banka AS has no effect on the direction of Colt CZ i.e., Colt CZ and Komercni Banka go up and down completely randomly.

Pair Corralation between Colt CZ and Komercni Banka

Assuming the 90 days trading horizon Colt CZ is expected to generate 2.41 times less return on investment than Komercni Banka. But when comparing it to its historical volatility, Colt CZ Group is 1.27 times less risky than Komercni Banka. It trades about 0.19 of its potential returns per unit of risk. Komercni Banka AS is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest  84,850  in Komercni Banka AS on December 30, 2024 and sell it today you would earn a total of  27,150  from holding Komercni Banka AS or generate 32.0% return on investment over 90 days.

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

Colt CZ Group  vs.  Komercni Banka AS

Colt CZ Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Colt CZ Group are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, Colt CZ may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Komercni Banka AS

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Komercni Banka AS are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Komercni Banka reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Colt CZ and Komercni Banka

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

The idea behind Colt CZ Group and Komercni Banka AS 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.