Correlation Between MCI Management and Polski Koncern

Can any of the company-specific risk be diversified away by investing in both MCI Management and Polski Koncern 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 Polski Koncern 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 Polski Koncern Naftowy, you can compare the effects of market volatilities on MCI Management and Polski Koncern 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 Polski Koncern. Check out your portfolio center. Please also check ongoing floating volatility patterns of MCI Management and Polski Koncern.

Diversification Opportunities for MCI Management and Polski Koncern

-0.33

Correlation Coefficient

MCI Management  Polski Koncern

Very good diversification

The 3 months correlation between MCI and Polski is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding MCI Management SA and Polski Koncern Naftowy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polski Koncern Naftowy 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 Polski Koncern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polski Koncern Naftowy has no effect on the direction of MCI Management i.e., MCI Management and Polski Koncern go up and down completely randomly.

Pair Corralation between MCI Management and Polski Koncern

Assuming the 90 days trading horizon MCI Management SA is expected to generate 1.02 times more return on investment than Polski Koncern. However, MCI Management is 1.02 times more volatile than Polski Koncern Naftowy. It trades about 0.1 of its potential returns per unit of risk. Polski Koncern Naftowy is currently generating about -0.17 per unit of risk. If you would invest  2,320  in MCI Management SA on September 2, 2024 and sell it today you would earn a total of  240.00  from holding MCI Management SA or generate 10.34% return on investment over 90 days.

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

MCI Management SA  vs.  Polski Koncern Naftowy

MCI Management SA

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MCI Management SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, MCI Management may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Polski Koncern Naftowy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Polski Koncern Naftowy has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with MCI Management and Polski Koncern

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

The idea behind MCI Management SA and Polski Koncern Naftowy 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.