Correlation Between Polski Koncern and Drago Entertainment

Can any of the company-specific risk be diversified away by investing in both Polski Koncern 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 Polski Koncern and Drago Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Polski Koncern Naftowy and Drago entertainment SA, you can compare the effects of market volatilities on Polski Koncern 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 Polski Koncern with a short position of Drago Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polski Koncern and Drago Entertainment.

Diversification Opportunities for Polski Koncern and Drago Entertainment

0.32

Correlation Coefficient

Polski Koncern  Drago Entertainment

Weak diversification

The 3 months correlation between Polski and Drago is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Polski Koncern Naftowy and Drago entertainment SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Drago entertainment and Polski Koncern 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 Polski Koncern Naftowy 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 Polski Koncern i.e., Polski Koncern and Drago Entertainment go up and down completely randomly.

Pair Corralation between Polski Koncern and Drago Entertainment

Assuming the 90 days trading horizon Polski Koncern Naftowy is expected to under-perform the Drago Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, Polski Koncern Naftowy is 1.44 times less risky than Drago Entertainment. The stock trades about -0.17 of its potential returns per unit of risk. The Drago entertainment SA is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  2,190  in Drago entertainment SA on August 31, 2024 and sell it today you would lose (30.00) from holding Drago entertainment SA or give up 1.37% of portfolio value over 90 days.

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

Polski Koncern Naftowy  vs.  Drago entertainment SA

Polski Koncern Naftowy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Polski Koncern Naftowy has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Drago entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Drago entertainment SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Drago Entertainment 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 Polski Koncern and Drago Entertainment

The main advantage of trading using opposite Polski Koncern and Drago Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polski Koncern 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 Polski Koncern Naftowy 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.

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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.