Correlation Between Bank Polska and Ailleron

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Can any of the company-specific risk be diversified away by investing in both Bank Polska and Ailleron 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 Polska and Ailleron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Polska Kasa and Ailleron SA, you can compare the effects of market volatilities on Bank Polska and Ailleron 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 Polska with a short position of Ailleron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Polska and Ailleron.

Diversification Opportunities for Bank Polska and Ailleron

-0.41
  Correlation Coefficient

Very good diversification

The 3 months correlation between Bank and Ailleron is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Bank Polska Kasa and Ailleron SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ailleron SA and Bank Polska 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 Polska Kasa are associated (or correlated) with Ailleron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ailleron SA has no effect on the direction of Bank Polska i.e., Bank Polska and Ailleron go up and down completely randomly.

Pair Corralation between Bank Polska and Ailleron

Assuming the 90 days trading horizon Bank Polska Kasa is expected to under-perform the Ailleron. In addition to that, Bank Polska is 1.28 times more volatile than Ailleron SA. It trades about -0.04 of its total potential returns per unit of risk. Ailleron SA is currently generating about 0.07 per unit of volatility. If you would invest  1,990  in Ailleron SA on September 5, 2024 and sell it today you would earn a total of  150.00  from holding Ailleron SA or generate 7.54% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Bank Polska Kasa  vs.  Ailleron SA

 Performance 
       Timeline  
Bank Polska Kasa 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 relatively invariable basic indicators, Bank Polska is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.
Ailleron SA 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Ailleron SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Ailleron may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Bank Polska and Ailleron Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bank Polska and Ailleron

The main advantage of trading using opposite Bank Polska and Ailleron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Polska position performs unexpectedly, Ailleron 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 Ailleron will offset losses from the drop in Ailleron's long position.
The idea behind Bank Polska Kasa and Ailleron 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.
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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