Correlation Between Bank Polska and Kogeneracja

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

Diversification Opportunities for Bank Polska and Kogeneracja

-0.03

Correlation Coefficient

Bank Polska  Kogeneracja

Good diversification

The 3 months correlation between Bank and Kogeneracja is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Bank Polska Kasa and Kogeneracja SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kogeneracja 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 Kogeneracja. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kogeneracja SA has no effect on the direction of Bank Polska i.e., Bank Polska and Kogeneracja go up and down completely randomly.

Pair Corralation between Bank Polska and Kogeneracja

Assuming the 90 days trading horizon Bank Polska Kasa is expected to generate 0.92 times more return on investment than Kogeneracja. However, Bank Polska Kasa is 1.08 times less risky than Kogeneracja. It trades about 0.17 of its potential returns per unit of risk. Kogeneracja SA is currently generating about -0.05 per unit of risk. If you would invest  14,290  in Bank Polska Kasa on December 2, 2024 and sell it today you would earn a total of  2,710  from holding Bank Polska Kasa or generate 18.96% return on investment over 90 days.

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

Bank Polska Kasa  vs.  Kogeneracja SA

Bank Polska Kasa

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bank Polska Kasa are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Bank Polska reported solid returns over the last few months and may actually be approaching a breakup point.

Kogeneracja SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kogeneracja SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Kogeneracja is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Bank Polska and Kogeneracja

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

The idea behind Bank Polska Kasa and Kogeneracja 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.

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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.