Correlation Between PMPG Polskie and Centrum Finansowe

Can any of the company-specific risk be diversified away by investing in both PMPG Polskie and Centrum Finansowe 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 PMPG Polskie and Centrum Finansowe into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PMPG Polskie Media and Centrum Finansowe Banku, you can compare the effects of market volatilities on PMPG Polskie and Centrum Finansowe 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 PMPG Polskie with a short position of Centrum Finansowe. Check out your portfolio center. Please also check ongoing floating volatility patterns of PMPG Polskie and Centrum Finansowe.

Diversification Opportunities for PMPG Polskie and Centrum Finansowe

0.23

Correlation Coefficient

PMPG Polskie  Centrum Finansowe

Modest diversification

The 3 months correlation between PMPG and Centrum is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding PMPG Polskie Media and Centrum Finansowe Banku in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centrum Finansowe Banku and PMPG Polskie 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 PMPG Polskie Media are associated (or correlated) with Centrum Finansowe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centrum Finansowe Banku has no effect on the direction of PMPG Polskie i.e., PMPG Polskie and Centrum Finansowe go up and down completely randomly.

Pair Corralation between PMPG Polskie and Centrum Finansowe

Assuming the 90 days trading horizon PMPG Polskie Media is expected to generate 1.21 times more return on investment than Centrum Finansowe. However, PMPG Polskie is 1.21 times more volatile than Centrum Finansowe Banku. It trades about 0.08 of its potential returns per unit of risk. Centrum Finansowe Banku is currently generating about -0.07 per unit of risk. If you would invest  177.00  in PMPG Polskie Media on December 29, 2024 and sell it today you would earn a total of  21.00  from holding PMPG Polskie Media or generate 11.86% return on investment over 90 days.

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

PMPG Polskie Media  vs.  Centrum Finansowe Banku

PMPG Polskie Media

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PMPG Polskie Media are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, PMPG Polskie reported solid returns over the last few months and may actually be approaching a breakup point.

Centrum Finansowe Banku

Risk-Adjusted Performance

Very Weak

Over the last 90 days Centrum Finansowe Banku has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with PMPG Polskie and Centrum Finansowe

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

The idea behind PMPG Polskie Media and Centrum Finansowe Banku 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.