Correlation Between Polski Koncern and Phillips

Can any of the company-specific risk be diversified away by investing in both Polski Koncern and Phillips 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 Phillips 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 Phillips 66, you can compare the effects of market volatilities on Polski Koncern and Phillips 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 Phillips. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polski Koncern and Phillips.

Diversification Opportunities for Polski Koncern and Phillips

0.26

Correlation Coefficient

Polski Koncern  Phillips

Modest diversification

The 3 months correlation between Polski and Phillips is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Polski Koncern Naftowy and Phillips 66 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phillips 66 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 Phillips. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phillips 66 has no effect on the direction of Polski Koncern i.e., Polski Koncern and Phillips go up and down completely randomly.

Pair Corralation between Polski Koncern and Phillips

Assuming the 90 days trading horizon Polski Koncern Naftowy is expected to generate 1.16 times more return on investment than Phillips. However, Polski Koncern is 1.16 times more volatile than Phillips 66. It trades about -0.17 of its potential returns per unit of risk. Phillips 66 is currently generating about -0.49 per unit of risk. If you would invest  1,208  in Polski Koncern Naftowy on September 23, 2024 and sell it today you would lose (95.00) from holding Polski Koncern Naftowy or give up 7.86% 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.  Phillips 66

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. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Phillips 66

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Phillips 66 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Polski Koncern and Phillips

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

The idea behind Polski Koncern Naftowy and Phillips 66 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..