Correlation Between Dino Polska and Budimex SA

Can any of the company-specific risk be diversified away by investing in both Dino Polska and Budimex SA 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 Dino Polska and Budimex SA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dino Polska SA and Budimex SA, you can compare the effects of market volatilities on Dino Polska and Budimex SA 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 Dino Polska with a short position of Budimex SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dino Polska and Budimex SA.

Diversification Opportunities for Dino Polska and Budimex SA

-0.79

Correlation Coefficient

Dino Polska  Budimex SA

Pay attention - limited upside

The 3 months correlation between Dino and Budimex is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Dino Polska SA and Budimex SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Budimex SA and Dino Polska 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 Dino Polska SA are associated (or correlated) with Budimex SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Budimex SA has no effect on the direction of Dino Polska i.e., Dino Polska and Budimex SA go up and down completely randomly.

Pair Corralation between Dino Polska and Budimex SA

Assuming the 90 days trading horizon Dino Polska is expected to generate 3.29 times less return on investment than Budimex SA. But when comparing it to its historical volatility, Dino Polska SA is 1.03 times less risky than Budimex SA. It trades about 0.02 of its potential returns per unit of risk. Budimex SA is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  25,128  in Budimex SA on October 10, 2024 and sell it today you would earn a total of  22,312  from holding Budimex SA or generate 88.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Dino Polska SA  vs.  Budimex SA

Dino Polska SA

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dino Polska SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Dino Polska reported solid returns over the last few months and may actually be approaching a breakup point.

Budimex SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Budimex 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 Dino Polska and Budimex SA

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

The idea behind Dino Polska SA and Budimex 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.