Correlation Between Monnari Trade and Bank Millennium

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

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

Diversification Opportunities for Monnari Trade and Bank Millennium

-0.62

Correlation Coefficient

Monnari Trade  Bank Millennium

Excellent diversification

The 3 months correlation between Monnari and Bank is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Monnari Trade SA and Bank Millennium SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Millennium SA and Monnari Trade 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 Monnari Trade SA are associated (or correlated) with Bank Millennium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Millennium SA has no effect on the direction of Monnari Trade i.e., Monnari Trade and Bank Millennium go up and down completely randomly.

Pair Corralation between Monnari Trade and Bank Millennium

Assuming the 90 days trading horizon Monnari Trade SA is expected to under-perform the Bank Millennium. But the stock apears to be less risky and, when comparing its historical volatility, Monnari Trade SA is 1.36 times less risky than Bank Millennium. The stock trades about -0.14 of its potential returns per unit of risk. The Bank Millennium SA is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  838.00  in Bank Millennium SA on October 12, 2024 and sell it today you would earn a total of  132.00  from holding Bank Millennium SA or generate 15.75% return on investment over 90 days.

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

Monnari Trade SA  vs.  Bank Millennium SA

Monnari Trade SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Monnari Trade SA 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 February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Bank Millennium SA

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bank Millennium SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Bank Millennium reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Monnari Trade and Bank Millennium

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

The idea behind Monnari Trade SA and Bank Millennium 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.