Correlation Between Polski Koncern and Bank Polska

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

Diversification Opportunities for Polski Koncern and Bank Polska

0.67

Correlation Coefficient

Polski Koncern  Bank Polska

Poor diversification

The 3 months correlation between Polski and Bank is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Polski Koncern Naftowy and Bank Polska Kasa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Polska Kasa 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 Bank Polska. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Polska Kasa has no effect on the direction of Polski Koncern i.e., Polski Koncern and Bank Polska go up and down completely randomly.

Pair Corralation between Polski Koncern and Bank Polska

Assuming the 90 days trading horizon Polski Koncern Naftowy is expected to generate 0.78 times more return on investment than Bank Polska. However, Polski Koncern Naftowy is 1.29 times less risky than Bank Polska. It trades about -0.13 of its potential returns per unit of risk. Bank Polska Kasa is currently generating about -0.11 per unit of risk. If you would invest  5,876  in Polski Koncern Naftowy on August 23, 2024 and sell it today you would lose (753.00) from holding Polski Koncern Naftowy or give up 12.81% of portfolio value over 90 days.

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

Polski Koncern Naftowy  vs.  Bank Polska Kasa

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 weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Bank Polska Kasa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bank Polska Kasa has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Polski Koncern and Bank Polska

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

The idea behind Polski Koncern Naftowy and Bank Polska Kasa 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.