Correlation Between Bank Millennium and Powszechny Zaklad

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

By analyzing existing cross correlation between Bank Millennium SA and Powszechny Zaklad Ubezpieczen, you can compare the effects of market volatilities on Bank Millennium and Powszechny Zaklad 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 Bank Millennium with a short position of Powszechny Zaklad. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Millennium and Powszechny Zaklad.

Diversification Opportunities for Bank Millennium and Powszechny Zaklad

0.48

Correlation Coefficient

Bank Millennium  Powszechny Zaklad

Very weak diversification

The 3 months correlation between Bank and Powszechny is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Bank Millennium SA and Powszechny Zaklad Ubezpieczen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Powszechny Zaklad and Bank Millennium 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 Bank Millennium SA are associated (or correlated) with Powszechny Zaklad. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Powszechny Zaklad has no effect on the direction of Bank Millennium i.e., Bank Millennium and Powszechny Zaklad go up and down completely randomly.

Pair Corralation between Bank Millennium and Powszechny Zaklad

Assuming the 90 days trading horizon Bank Millennium SA is expected to generate 1.41 times more return on investment than Powszechny Zaklad. However, Bank Millennium is 1.41 times more volatile than Powszechny Zaklad Ubezpieczen. It trades about 0.05 of its potential returns per unit of risk. Powszechny Zaklad Ubezpieczen is currently generating about 0.06 per unit of risk. If you would invest  550.00  in Bank Millennium SA on October 4, 2024 and sell it today you would earn a total of  340.00  from holding Bank Millennium SA or generate 61.82% return on investment over 90 days.

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

Bank Millennium SA  vs.  Powszechny Zaklad Ubezpieczen

Bank Millennium SA

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bank Millennium SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Bank Millennium may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Powszechny Zaklad

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Powszechny Zaklad Ubezpieczen are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Powszechny Zaklad may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Bank Millennium and Powszechny Zaklad

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

The idea behind Bank Millennium SA and Powszechny Zaklad Ubezpieczen 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.