Correlation Between Polski Koncern and Wirtualna Polska

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

Diversification Opportunities for Polski Koncern and Wirtualna Polska

0.38

Correlation Coefficient

Polski Koncern  Wirtualna Polska

Weak diversification

The 3 months correlation between Polski and Wirtualna is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Polski Koncern Naftowy and Wirtualna Polska Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wirtualna Polska Holding 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 Wirtualna Polska. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wirtualna Polska Holding has no effect on the direction of Polski Koncern i.e., Polski Koncern and Wirtualna Polska go up and down completely randomly.

Pair Corralation between Polski Koncern and Wirtualna Polska

Assuming the 90 days trading horizon Polski Koncern Naftowy is expected to generate 0.67 times more return on investment than Wirtualna Polska. However, Polski Koncern Naftowy is 1.49 times less risky than Wirtualna Polska. It trades about -0.01 of its potential returns per unit of risk. Wirtualna Polska Holding is currently generating about -0.05 per unit of risk. If you would invest  5,382  in Polski Koncern Naftowy on October 25, 2024 and sell it today you would lose (102.00) from holding Polski Koncern Naftowy or give up 1.9% 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.  Wirtualna Polska Holding

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 relatively invariable basic indicators, Polski Koncern is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Wirtualna Polska Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wirtualna Polska Holding 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 Polski Koncern and Wirtualna Polska

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

The idea behind Polski Koncern Naftowy and Wirtualna Polska Holding 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.