Correlation Between MBank SA and Saule Technologies
Can any of the company-specific risk be diversified away by investing in both MBank SA and Saule Technologies 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 Saule Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between mBank SA and Saule Technologies SA, you can compare the effects of market volatilities on MBank SA and Saule Technologies 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 Saule Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of MBank SA and Saule Technologies.
Diversification Opportunities for MBank SA and Saule Technologies
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between MBank and Saule is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding mBank SA and Saule Technologies SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saule Technologies 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 Saule Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saule Technologies has no effect on the direction of MBank SA i.e., MBank SA and Saule Technologies go up and down completely randomly.
Pair Corralation between MBank SA and Saule Technologies
Assuming the 90 days trading horizon mBank SA is expected to generate 0.66 times more return on investment than Saule Technologies. However, mBank SA is 1.53 times less risky than Saule Technologies. It trades about 0.07 of its potential returns per unit of risk. Saule Technologies SA is currently generating about -0.04 per unit of risk. If you would invest 30,000 in mBank SA on October 9, 2024 and sell it today you would earn a total of 25,200 from holding mBank SA or generate 84.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
mBank SA vs. Saule Technologies SA
Performance |
Timeline |
mBank SA |
Saule Technologies |
MBank SA and Saule Technologies Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with MBank SA and Saule Technologies
The main advantage of trading using opposite MBank SA and Saule Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MBank SA position performs unexpectedly, Saule Technologies 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 Saule Technologies will offset losses from the drop in Saule Technologies' long position.MBank SA vs. Santander Bank Polska | MBank SA vs. LSI Software SA | MBank SA vs. Gamedust SA | MBank SA vs. Movie Games SA |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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