Correlation Between MBank SA and Medicofarma Biotech
Can any of the company-specific risk be diversified away by investing in both MBank SA and Medicofarma Biotech 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 Medicofarma Biotech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between mBank SA and Medicofarma Biotech SA, you can compare the effects of market volatilities on MBank SA and Medicofarma Biotech 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 Medicofarma Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of MBank SA and Medicofarma Biotech.
Diversification Opportunities for MBank SA and Medicofarma Biotech
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between MBank and Medicofarma is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding mBank SA and Medicofarma Biotech SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medicofarma Biotech 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 Medicofarma Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medicofarma Biotech has no effect on the direction of MBank SA i.e., MBank SA and Medicofarma Biotech go up and down completely randomly.
Pair Corralation between MBank SA and Medicofarma Biotech
Assuming the 90 days trading horizon mBank SA is expected to generate 0.45 times more return on investment than Medicofarma Biotech. However, mBank SA is 2.21 times less risky than Medicofarma Biotech. It trades about -0.1 of its potential returns per unit of risk. Medicofarma Biotech SA is currently generating about -0.09 per unit of risk. If you would invest 63,440 in mBank SA on September 24, 2024 and sell it today you would lose (8,760) from holding mBank SA or give up 13.81% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 98.41% |
Values | Daily Returns |
mBank SA vs. Medicofarma Biotech SA
Performance |
Timeline |
mBank SA |
Medicofarma Biotech |
MBank SA and Medicofarma Biotech Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with MBank SA and Medicofarma Biotech
The main advantage of trading using opposite MBank SA and Medicofarma Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MBank SA position performs unexpectedly, Medicofarma Biotech 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 Medicofarma Biotech will offset losses from the drop in Medicofarma Biotech's long position.MBank SA vs. UniCredit SpA | MBank SA vs. Santander Bank Polska | MBank SA vs. Bank Polska Kasa | MBank SA vs. ING Bank lski |
Medicofarma Biotech vs. Pyramid Games SA | Medicofarma Biotech vs. TEN SQUARE GAMES | Medicofarma Biotech vs. Logintrade SA | Medicofarma Biotech vs. Gaming Factory SA |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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