Correlation Between Bank Polska and Varsav Game

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

Diversification Opportunities for Bank Polska and Varsav Game

0.24

Correlation Coefficient

Bank Polska  Varsav Game

Modest diversification

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

Pair Corralation between Bank Polska and Varsav Game

Assuming the 90 days trading horizon Bank Polska Kasa is expected to under-perform the Varsav Game. But the stock apears to be less risky and, when comparing its historical volatility, Bank Polska Kasa is 2.2 times less risky than Varsav Game. The stock trades about -0.01 of its potential returns per unit of risk. The Varsav Game Studios is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  49.00  in Varsav Game Studios on September 15, 2024 and sell it today you would earn a total of  1.00  from holding Varsav Game Studios or generate 2.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Bank Polska Kasa  vs.  Varsav Game Studios

Bank Polska Kasa

Risk-Adjusted Performance

0 of 100

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.

Varsav Game Studios

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Varsav Game Studios are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Varsav Game may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Bank Polska and Varsav Game

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

The idea behind Bank Polska Kasa and Varsav Game Studios 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.