Correlation Between Polski Koncern and GreenX Metals

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

By analyzing existing cross correlation between Polski Koncern Naftowy and GreenX Metals, you can compare the effects of market volatilities on Polski Koncern and GreenX Metals 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 Polski Koncern with a short position of GreenX Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polski Koncern and GreenX Metals.

Diversification Opportunities for Polski Koncern and GreenX Metals

-0.36

Correlation Coefficient

Polski Koncern  GreenX Metals

Very good diversification

The 3 months correlation between Polski and GreenX is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Polski Koncern Naftowy and GreenX Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GreenX Metals and Polski Koncern 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 Polski Koncern Naftowy are associated (or correlated) with GreenX Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GreenX Metals has no effect on the direction of Polski Koncern i.e., Polski Koncern and GreenX Metals go up and down completely randomly.

Pair Corralation between Polski Koncern and GreenX Metals

Assuming the 90 days trading horizon Polski Koncern Naftowy is expected to generate 0.56 times more return on investment than GreenX Metals. However, Polski Koncern Naftowy is 1.79 times less risky than GreenX Metals. It trades about -0.02 of its potential returns per unit of risk. GreenX Metals is currently generating about -0.02 per unit of risk. If you would invest  5,996  in Polski Koncern Naftowy on August 26, 2024 and sell it today you would lose (813.00) from holding Polski Koncern Naftowy or give up 13.56% of portfolio value over 90 days.

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

Polski Koncern Naftowy  vs.  GreenX Metals

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 latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

GreenX Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GreenX Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, GreenX Metals 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 Polski Koncern and GreenX Metals

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

The idea behind Polski Koncern Naftowy and GreenX Metals 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.