Correlation Between Polski Koncern and Stalprodukt

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

Diversification Opportunities for Polski Koncern and Stalprodukt

0.82
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Polski and Stalprodukt is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Polski Koncern Naftowy and Stalprodukt SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stalprodukt SA 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 Stalprodukt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stalprodukt SA has no effect on the direction of Polski Koncern i.e., Polski Koncern and Stalprodukt go up and down completely randomly.

Pair Corralation between Polski Koncern and Stalprodukt

Assuming the 90 days trading horizon Polski Koncern Naftowy is expected to generate 1.51 times more return on investment than Stalprodukt. However, Polski Koncern is 1.51 times more volatile than Stalprodukt SA. It trades about -0.11 of its potential returns per unit of risk. Stalprodukt SA is currently generating about -0.17 per unit of risk. If you would invest  5,598  in Polski Koncern Naftowy on October 7, 2024 and sell it today you would lose (673.00) from holding Polski Koncern Naftowy or give up 12.02% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Polski Koncern Naftowy  vs.  Stalprodukt SA

 Performance 
       Timeline  
Polski Koncern Naftowy 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.
Stalprodukt SA 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Stalprodukt SA 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 February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Polski Koncern and Stalprodukt Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Polski Koncern and Stalprodukt

The main advantage of trading using opposite Polski Koncern and Stalprodukt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polski Koncern position performs unexpectedly, Stalprodukt 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 Stalprodukt will offset losses from the drop in Stalprodukt's long position.
The idea behind Polski Koncern Naftowy and Stalprodukt 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

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