Correlation Between MBank SA and E Shopping

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

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

Diversification Opportunities for MBank SA and E Shopping

0.74

Correlation Coefficient

MBank SA  E Shopping

Poor diversification

The 3 months correlation between MBank and ESG is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding mBank SA and E shopping Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E shopping Group and MBank SA 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 mBank SA are associated (or correlated) with E Shopping. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E shopping Group has no effect on the direction of MBank SA i.e., MBank SA and E Shopping go up and down completely randomly.

Pair Corralation between MBank SA and E Shopping

Assuming the 90 days trading horizon mBank SA is expected to generate 0.29 times more return on investment than E Shopping. However, mBank SA is 3.45 times less risky than E Shopping. It trades about 0.05 of its potential returns per unit of risk. E shopping Group SA is currently generating about 0.0 per unit of risk. If you would invest  34,360  in mBank SA on October 4, 2024 and sell it today you would earn a total of  20,360  from holding mBank SA or generate 59.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.17%
Values	Daily Returns

mBank SA  vs.  E shopping Group SA

mBank SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

E shopping Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days E shopping Group 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 MBank SA and E Shopping

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

The idea behind mBank SA and E shopping Group 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.

Check out your portfolio center.

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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.