Correlation Between Polski Koncern and HM Inwest

Can any of the company-specific risk be diversified away by investing in both Polski Koncern and HM Inwest 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 HM Inwest 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 HM Inwest SA, you can compare the effects of market volatilities on Polski Koncern and HM Inwest 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 HM Inwest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polski Koncern and HM Inwest.

Diversification Opportunities for Polski Koncern and HM Inwest

-0.84

Correlation Coefficient

Polski Koncern  HM Inwest

Pay attention - limited upside

The 3 months correlation between Polski and HMI is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Polski Koncern Naftowy and HM Inwest SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HM Inwest SA 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 HM Inwest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HM Inwest SA has no effect on the direction of Polski Koncern i.e., Polski Koncern and HM Inwest go up and down completely randomly.

Pair Corralation between Polski Koncern and HM Inwest

Assuming the 90 days trading horizon Polski Koncern Naftowy is expected to under-perform the HM Inwest. But the stock apears to be less risky and, when comparing its historical volatility, Polski Koncern Naftowy is 2.03 times less risky than HM Inwest. The stock trades about -0.12 of its potential returns per unit of risk. The HM Inwest SA is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  3,580  in HM Inwest SA on August 26, 2024 and sell it today you would earn a total of  1,240  from holding HM Inwest SA or generate 34.64% return on investment over 90 days.

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

Polski Koncern Naftowy  vs.  HM Inwest SA

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.

HM Inwest SA

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in HM Inwest SA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, HM Inwest reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Polski Koncern and HM Inwest

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

The idea behind Polski Koncern Naftowy and HM Inwest 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.