Correlation Between ING Bank and Bank Handlowy

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

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

Diversification Opportunities for ING Bank and Bank Handlowy

0.94

Correlation Coefficient

ING Bank  Bank Handlowy

Almost no diversification

The 3 months correlation between ING and Bank is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding ING Bank lski and Bank Handlowy w in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Handlowy w and ING Bank 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 ING Bank lski are associated (or correlated) with Bank Handlowy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Handlowy w has no effect on the direction of ING Bank i.e., ING Bank and Bank Handlowy go up and down completely randomly.

Pair Corralation between ING Bank and Bank Handlowy

Assuming the 90 days trading horizon ING Bank lski is expected to generate 1.62 times more return on investment than Bank Handlowy. However, ING Bank is 1.62 times more volatile than Bank Handlowy w. It trades about 0.23 of its potential returns per unit of risk. Bank Handlowy w is currently generating about 0.36 per unit of risk. If you would invest  24,150  in ING Bank lski on December 29, 2024 and sell it today you would earn a total of  8,350  from holding ING Bank lski or generate 34.58% return on investment over 90 days.

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

ING Bank lski  vs.  Bank Handlowy w

ING Bank lski

Risk-Adjusted Performance

Solid

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

Bank Handlowy w

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Bank Handlowy w are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Bank Handlowy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ING Bank and Bank Handlowy

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

The idea behind ING Bank lski and Bank Handlowy w 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.

Check out your portfolio center.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.