Correlation Between Polski Koncern and Carsales

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

Diversification Opportunities for Polski Koncern and Carsales

-0.62

Correlation Coefficient

Polski Koncern  Carsales

Excellent diversification

The 3 months correlation between Polski and Carsales is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Polski Koncern Naftowy and CarsalesCom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarsalesCom 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 Carsales. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CarsalesCom has no effect on the direction of Polski Koncern i.e., Polski Koncern and Carsales go up and down completely randomly.

Pair Corralation between Polski Koncern and Carsales

Assuming the 90 days trading horizon Polski Koncern Naftowy is expected to generate 0.91 times more return on investment than Carsales. However, Polski Koncern Naftowy is 1.1 times less risky than Carsales. It trades about 0.42 of its potential returns per unit of risk. CarsalesCom is currently generating about -0.12 per unit of risk. If you would invest  1,082  in Polski Koncern Naftowy on December 21, 2024 and sell it today you would earn a total of  542.00  from holding Polski Koncern Naftowy or generate 50.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Polski Koncern Naftowy  vs.  CarsalesCom

Polski Koncern Naftowy

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Polski Koncern Naftowy are ranked lower than 33 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Polski Koncern reported solid returns over the last few months and may actually be approaching a breakup point.

CarsalesCom

Risk-Adjusted Performance

Very Weak

Over the last 90 days CarsalesCom 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 April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Polski Koncern and Carsales

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

The idea behind Polski Koncern Naftowy and CarsalesCom 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.