Correlation Between Powszechna Kasa and BOC Hong

Can any of the company-specific risk be diversified away by investing in both Powszechna Kasa and BOC Hong 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 Powszechna Kasa and BOC Hong into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Powszechna Kasa Oszczednosci and BOC Hong Kong, you can compare the effects of market volatilities on Powszechna Kasa and BOC Hong 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 Powszechna Kasa with a short position of BOC Hong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Powszechna Kasa and BOC Hong.

Diversification Opportunities for Powszechna Kasa and BOC Hong

0.89

Correlation Coefficient

Powszechna Kasa  BOC Hong

Very poor diversification

The 3 months correlation between Powszechna and BOC is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Powszechna Kasa Oszczednosci and BOC Hong Kong in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOC Hong Kong and Powszechna Kasa 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 Powszechna Kasa Oszczednosci are associated (or correlated) with BOC Hong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOC Hong Kong has no effect on the direction of Powszechna Kasa i.e., Powszechna Kasa and BOC Hong go up and down completely randomly.

Pair Corralation between Powszechna Kasa and BOC Hong

Assuming the 90 days horizon Powszechna Kasa Oszczednosci is expected to generate 2.51 times more return on investment than BOC Hong. However, Powszechna Kasa is 2.51 times more volatile than BOC Hong Kong. It trades about 0.15 of its potential returns per unit of risk. BOC Hong Kong is currently generating about 0.18 per unit of risk. If you would invest  1,457  in Powszechna Kasa Oszczednosci on December 21, 2024 and sell it today you would earn a total of  564.00  from holding Powszechna Kasa Oszczednosci or generate 38.71% return on investment over 90 days.

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

Powszechna Kasa Oszczednosci  vs.  BOC Hong Kong

Powszechna Kasa Oszc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Powszechna Kasa Oszczednosci are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady forward-looking signals, Powszechna Kasa showed solid returns over the last few months and may actually be approaching a breakup point.

BOC Hong Kong

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BOC Hong Kong are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, BOC Hong showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Powszechna Kasa and BOC Hong

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

The idea behind Powszechna Kasa Oszczednosci and BOC Hong Kong 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 Global Correlations module to find global opportunities by holding instruments from different markets.