Correlation Between Bank Handlowy and MBank SA

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

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

Diversification Opportunities for Bank Handlowy and MBank SA

0.47

Correlation Coefficient

Bank Handlowy  MBank SA

Very weak diversification

The 3 months correlation between Bank and MBank is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Bank Handlowy w and mBank SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on mBank SA and Bank Handlowy 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 Bank Handlowy w are associated (or correlated) with MBank SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of mBank SA has no effect on the direction of Bank Handlowy i.e., Bank Handlowy and MBank SA go up and down completely randomly.

Pair Corralation between Bank Handlowy and MBank SA

Assuming the 90 days trading horizon Bank Handlowy w is expected to generate 0.59 times more return on investment than MBank SA. However, Bank Handlowy w is 1.7 times less risky than MBank SA. It trades about 0.04 of its potential returns per unit of risk. mBank SA is currently generating about 0.0 per unit of risk. If you would invest  10,975  in Bank Handlowy w on April 23, 2025 and sell it today you would earn a total of  285.00  from holding Bank Handlowy w or generate 2.6% return on investment over 90 days.

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

Bank Handlowy w  vs.  mBank SA

Bank Handlowy w

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bank Handlowy w are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Bank Handlowy is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

mBank SA

Risk-Adjusted Performance

Very Weak

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

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

The idea behind Bank Handlowy w and mBank 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.