Correlation Between Primoco UAV and Komercni Banka

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

By analyzing existing cross correlation between Primoco UAV SE and Komercni Banka AS, you can compare the effects of market volatilities on Primoco UAV and Komercni Banka 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 Primoco UAV with a short position of Komercni Banka. Check out your portfolio center. Please also check ongoing floating volatility patterns of Primoco UAV and Komercni Banka.

Diversification Opportunities for Primoco UAV and Komercni Banka

-0.57

Correlation Coefficient

Primoco UAV  Komercni Banka

Excellent diversification

The 3 months correlation between Primoco and Komercni is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Primoco UAV SE and Komercni Banka AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Komercni Banka AS and Primoco UAV 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 Primoco UAV SE are associated (or correlated) with Komercni Banka. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Komercni Banka AS has no effect on the direction of Primoco UAV i.e., Primoco UAV and Komercni Banka go up and down completely randomly.

Pair Corralation between Primoco UAV and Komercni Banka

Assuming the 90 days trading horizon Primoco UAV SE is expected to under-perform the Komercni Banka. In addition to that, Primoco UAV is 1.49 times more volatile than Komercni Banka AS. It trades about -0.07 of its total potential returns per unit of risk. Komercni Banka AS is currently generating about 0.15 per unit of volatility. If you would invest  76,750  in Komercni Banka AS on August 30, 2024 and sell it today you would earn a total of  5,150  from holding Komercni Banka AS or generate 6.71% return on investment over 90 days.

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

Primoco UAV SE  vs.  Komercni Banka AS

Primoco UAV SE

Risk-Adjusted Performance

0 of 100

Very Weak

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

Komercni Banka AS

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Komercni Banka AS are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Komercni Banka may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Primoco UAV and Komercni Banka

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

The idea behind Primoco UAV SE and Komercni Banka AS 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.