Correlation Between Bank Polska and Drago Entertainment

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

Diversification Opportunities for Bank Polska and Drago Entertainment

0.24

Correlation Coefficient

Bank Polska  Drago Entertainment

Modest diversification

The 3 months correlation between Bank and Drago is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Bank Polska Kasa and Drago entertainment SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Drago entertainment 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 Drago Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Drago entertainment has no effect on the direction of Bank Polska i.e., Bank Polska and Drago Entertainment go up and down completely randomly.

Pair Corralation between Bank Polska and Drago Entertainment

Assuming the 90 days trading horizon Bank Polska Kasa is expected to generate 0.68 times more return on investment than Drago Entertainment. However, Bank Polska Kasa is 1.48 times less risky than Drago Entertainment. It trades about -0.01 of its potential returns per unit of risk. Drago entertainment SA is currently generating about -0.01 per unit of risk. If you would invest  16,240  in Bank Polska Kasa on October 25, 2024 and sell it today you would lose (935.00) from holding Bank Polska Kasa or give up 5.76% of portfolio value over 90 days.

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

Bank Polska Kasa  vs.  Drago entertainment SA

Bank Polska Kasa

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bank Polska Kasa are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Bank Polska may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Drago entertainment

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Drago entertainment SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Drago Entertainment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Bank Polska and Drago Entertainment

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

The idea behind Bank Polska Kasa and Drago entertainment 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.