Correlation Between Colt CZ and Tatry Mountain

Can any of the company-specific risk be diversified away by investing in both Colt CZ and Tatry Mountain 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 Tatry Mountain 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 Tatry Mountain Resorts, you can compare the effects of market volatilities on Colt CZ and Tatry Mountain 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 Tatry Mountain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Colt CZ and Tatry Mountain.

Diversification Opportunities for Colt CZ and Tatry Mountain

0.33

Correlation Coefficient

Colt CZ  Tatry Mountain

Weak diversification

The 3 months correlation between Colt and Tatry is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Colt CZ Group and Tatry Mountain Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tatry Mountain Resorts 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 Tatry Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tatry Mountain Resorts has no effect on the direction of Colt CZ i.e., Colt CZ and Tatry Mountain go up and down completely randomly.

Pair Corralation between Colt CZ and Tatry Mountain

Assuming the 90 days trading horizon Colt CZ Group is expected to generate 0.53 times more return on investment than Tatry Mountain. However, Colt CZ Group is 1.87 times less risky than Tatry Mountain. It trades about 0.28 of its potential returns per unit of risk. Tatry Mountain Resorts is currently generating about 0.03 per unit of risk. If you would invest  61,900  in Colt CZ Group on November 28, 2024 and sell it today you would earn a total of  12,300  from holding Colt CZ Group or generate 19.87% return on investment over 90 days.

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

Colt CZ Group  vs.  Tatry Mountain Resorts

Colt CZ Group

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Colt CZ Group are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, Colt CZ reported solid returns over the last few months and may actually be approaching a breakup point.

Tatry Mountain Resorts

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tatry Mountain Resorts are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Tatry Mountain 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 Colt CZ and Tatry Mountain

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

The idea behind Colt CZ Group and Tatry Mountain Resorts 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.