Correlation Between MCI Management and Kogeneracja

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

By analyzing existing cross correlation between MCI Management SA and Kogeneracja SA, you can compare the effects of market volatilities on MCI Management and Kogeneracja 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 MCI Management with a short position of Kogeneracja. Check out your portfolio center. Please also check ongoing floating volatility patterns of MCI Management and Kogeneracja.

Diversification Opportunities for MCI Management and Kogeneracja

0.39

Correlation Coefficient

MCI Management  Kogeneracja

Weak diversification

The 3 months correlation between MCI and Kogeneracja is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding MCI Management SA and Kogeneracja SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kogeneracja SA and MCI Management 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 MCI Management SA are associated (or correlated) with Kogeneracja. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kogeneracja SA has no effect on the direction of MCI Management i.e., MCI Management and Kogeneracja go up and down completely randomly.

Pair Corralation between MCI Management and Kogeneracja

Assuming the 90 days trading horizon MCI Management SA is expected to generate 0.55 times more return on investment than Kogeneracja. However, MCI Management SA is 1.81 times less risky than Kogeneracja. It trades about 0.01 of its potential returns per unit of risk. Kogeneracja SA is currently generating about 0.0 per unit of risk. If you would invest  2,530  in MCI Management SA on September 14, 2024 and sell it today you would earn a total of  10.00  from holding MCI Management SA or generate 0.4% return on investment over 90 days.

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

MCI Management SA  vs.  Kogeneracja SA

MCI Management SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Kogeneracja SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind MCI Management SA and Kogeneracja 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.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.