Correlation Between MT 1997 and Cez AS

Can any of the company-specific risk be diversified away by investing in both MT 1997 and Cez AS 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 MT 1997 and Cez AS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MT 1997 AS and Cez AS, you can compare the effects of market volatilities on MT 1997 and Cez AS 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 MT 1997 with a short position of Cez AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of MT 1997 and Cez AS.

Diversification Opportunities for MT 1997 and Cez AS

-0.5

Correlation Coefficient

MT 1997  Cez AS

Very good diversification

The 3 months correlation between KLIKY and Cez is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding MT 1997 AS and Cez AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cez AS and MT 1997 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 MT 1997 AS are associated (or correlated) with Cez AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cez AS has no effect on the direction of MT 1997 i.e., MT 1997 and Cez AS go up and down completely randomly.

Pair Corralation between MT 1997 and Cez AS

Assuming the 90 days trading horizon MT 1997 AS is expected to under-perform the Cez AS. In addition to that, MT 1997 is 2.15 times more volatile than Cez AS. It trades about -0.14 of its total potential returns per unit of risk. Cez AS is currently generating about 0.2 per unit of volatility. If you would invest  86,450  in Cez AS on August 30, 2024 and sell it today you would earn a total of  9,500  from holding Cez AS or generate 10.99% return on investment over 90 days.

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

MT 1997 AS  vs.  Cez AS

MT 1997 AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MT 1997 AS 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 December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Cez AS

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cez AS are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Cez AS may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with MT 1997 and Cez AS

The main advantage of trading using opposite MT 1997 and Cez AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MT 1997 position performs unexpectedly, Cez AS 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 Cez AS will offset losses from the drop in Cez AS's long position.

The idea behind MT 1997 AS and Cez 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.