Correlation Between River and Komercni Banka

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

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

Diversification Opportunities for River and Komercni Banka

0.0

Correlation Coefficient

River  Komercni Banka

Pay attention - limited upside

The 3 months correlation between River and Komercni is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding River and Mercantile and Komercni Banka in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Komercni Banka and River 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 River and Mercantile 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 has no effect on the direction of River i.e., River and Komercni Banka go up and down completely randomly.

Pair Corralation between River and Komercni Banka

Assuming the 90 days trading horizon River and Mercantile is expected to generate 157.1 times more return on investment than Komercni Banka. However, River is 157.1 times more volatile than Komercni Banka. It trades about 0.06 of its potential returns per unit of risk. Komercni Banka is currently generating about 0.06 per unit of risk. If you would invest  14,400  in River and Mercantile on October 5, 2024 and sell it today you would earn a total of  3,350  from holding River and Mercantile or generate 23.26% return on investment over 90 days.

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

River and Mercantile  vs.  Komercni Banka

River and Mercantile

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in River and Mercantile are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, River is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Komercni Banka

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Komercni Banka has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Komercni Banka is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with River and Komercni Banka

The main advantage of trading using opposite River and Komercni Banka positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if River 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 River and Mercantile and Komercni Banka 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.