Correlation Between Kogeneracja and Vercom SA

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

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

Diversification Opportunities for Kogeneracja and Vercom SA

0.39

Correlation Coefficient

Kogeneracja  Vercom SA

Weak diversification

The 3 months correlation between Kogeneracja and Vercom is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Kogeneracja SA and Vercom SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vercom SA and Kogeneracja 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 Kogeneracja SA are associated (or correlated) with Vercom SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vercom SA has no effect on the direction of Kogeneracja i.e., Kogeneracja and Vercom SA go up and down completely randomly.

Pair Corralation between Kogeneracja and Vercom SA

Assuming the 90 days trading horizon Kogeneracja SA is expected to under-perform the Vercom SA. In addition to that, Kogeneracja is 1.23 times more volatile than Vercom SA. It trades about -0.01 of its total potential returns per unit of risk. Vercom SA is currently generating about 0.05 per unit of volatility. If you would invest  11,200  in Vercom SA on September 12, 2024 and sell it today you would earn a total of  550.00  from holding Vercom SA or generate 4.91% return on investment over 90 days.

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

Kogeneracja SA  vs.  Vercom SA

Kogeneracja SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kogeneracja SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Kogeneracja is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Vercom SA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vercom SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Vercom SA 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 Kogeneracja and Vercom SA

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

The idea behind Kogeneracja SA and Vercom 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.