Correlation Between MBank SA and Poznanska Korporacja

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

By analyzing existing cross correlation between mBank SA and Poznanska Korporacja Budowlana, you can compare the effects of market volatilities on MBank SA and Poznanska Korporacja 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 Poznanska Korporacja. Check out your portfolio center. Please also check ongoing floating volatility patterns of MBank SA and Poznanska Korporacja.

Diversification Opportunities for MBank SA and Poznanska Korporacja

0.51

Correlation Coefficient

MBank SA  Poznanska Korporacja

Very weak diversification

The 3 months correlation between MBank and Poznanska is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding mBank SA and Poznanska Korporacja Budowlana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Poznanska Korporacja 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 Poznanska Korporacja. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Poznanska Korporacja has no effect on the direction of MBank SA i.e., MBank SA and Poznanska Korporacja go up and down completely randomly.

Pair Corralation between MBank SA and Poznanska Korporacja

Assuming the 90 days trading horizon mBank SA is expected to under-perform the Poznanska Korporacja. But the stock apears to be less risky and, when comparing its historical volatility, mBank SA is 1.16 times less risky than Poznanska Korporacja. The stock trades about -0.07 of its potential returns per unit of risk. The Poznanska Korporacja Budowlana is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  1,980  in Poznanska Korporacja Budowlana on October 9, 2024 and sell it today you would lose (105.00) from holding Poznanska Korporacja Budowlana or give up 5.3% of portfolio value over 90 days.

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

mBank SA  vs.  Poznanska Korporacja Budowlana

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 latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Poznanska Korporacja

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Poznanska Korporacja Budowlana has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Poznanska Korporacja 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 MBank SA and Poznanska Korporacja

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

The idea behind mBank SA and Poznanska Korporacja Budowlana 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.