Correlation Between MBank SA and Wirtualna Polska

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

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

Diversification Opportunities for MBank SA and Wirtualna Polska

-0.07

Correlation Coefficient

MBank SA  Wirtualna Polska

Good diversification

The 3 months correlation between MBank and Wirtualna is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding mBank SA and Wirtualna Polska Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wirtualna Polska Holding 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 Wirtualna Polska. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wirtualna Polska Holding has no effect on the direction of MBank SA i.e., MBank SA and Wirtualna Polska go up and down completely randomly.

Pair Corralation between MBank SA and Wirtualna Polska

Assuming the 90 days trading horizon mBank SA is expected to generate 0.94 times more return on investment than Wirtualna Polska. However, mBank SA is 1.06 times less risky than Wirtualna Polska. It trades about 0.28 of its potential returns per unit of risk. Wirtualna Polska Holding is currently generating about -0.24 per unit of risk. If you would invest  54,900  in mBank SA on October 26, 2024 and sell it today you would earn a total of  4,040  from holding mBank SA or generate 7.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

mBank SA  vs.  Wirtualna Polska Holding

mBank SA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in mBank SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Wirtualna Polska Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wirtualna Polska Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Wirtualna Polska 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 Wirtualna Polska

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

The idea behind mBank SA and Wirtualna Polska Holding 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.