Correlation Between Enea SA and Polski Koncern

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

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

Diversification Opportunities for Enea SA and Polski Koncern

0.87

Correlation Coefficient

Enea SA  Polski Koncern

Very poor diversification

The 3 months correlation between Enea and Polski is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Enea SA and Polski Koncern Naftowy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polski Koncern Naftowy and Enea SA 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 Enea SA are associated (or correlated) with Polski Koncern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polski Koncern Naftowy has no effect on the direction of Enea SA i.e., Enea SA and Polski Koncern go up and down completely randomly.

Pair Corralation between Enea SA and Polski Koncern

Assuming the 90 days trading horizon Enea SA is expected to generate 1.92 times less return on investment than Polski Koncern. In addition to that, Enea SA is 1.07 times more volatile than Polski Koncern Naftowy. It trades about 0.24 of its total potential returns per unit of risk. Polski Koncern Naftowy is currently generating about 0.49 per unit of volatility. If you would invest  4,720  in Polski Koncern Naftowy on December 30, 2024 and sell it today you would earn a total of  2,184  from holding Polski Koncern Naftowy or generate 46.27% return on investment over 90 days.

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

Enea SA  vs.  Polski Koncern Naftowy

Enea SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Enea SA are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Enea SA reported solid returns over the last few months and may actually be approaching a breakup point.

Polski Koncern Naftowy

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Polski Koncern Naftowy are ranked lower than 38 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Polski Koncern reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Enea SA and Polski Koncern

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

The idea behind Enea SA and Polski Koncern Naftowy 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.