Correlation Between Powszechny Zaklad and Biztech Konsulting

Can any of the company-specific risk be diversified away by investing in both Powszechny Zaklad and Biztech Konsulting 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 Powszechny Zaklad and Biztech Konsulting into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Powszechny Zaklad Ubezpieczen and Biztech Konsulting SA, you can compare the effects of market volatilities on Powszechny Zaklad and Biztech Konsulting 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 Powszechny Zaklad with a short position of Biztech Konsulting. Check out your portfolio center. Please also check ongoing floating volatility patterns of Powszechny Zaklad and Biztech Konsulting.

Diversification Opportunities for Powszechny Zaklad and Biztech Konsulting

0.83

Correlation Coefficient

Powszechny Zaklad  Biztech Konsulting

Very poor diversification

The 3 months correlation between Powszechny and Biztech is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Powszechny Zaklad Ubezpieczen and Biztech Konsulting SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biztech Konsulting and Powszechny Zaklad 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 Powszechny Zaklad Ubezpieczen are associated (or correlated) with Biztech Konsulting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biztech Konsulting has no effect on the direction of Powszechny Zaklad i.e., Powszechny Zaklad and Biztech Konsulting go up and down completely randomly.

Pair Corralation between Powszechny Zaklad and Biztech Konsulting

Assuming the 90 days trading horizon Powszechny Zaklad is expected to generate 2.29 times less return on investment than Biztech Konsulting. But when comparing it to its historical volatility, Powszechny Zaklad Ubezpieczen is 3.65 times less risky than Biztech Konsulting. It trades about 0.17 of its potential returns per unit of risk. Biztech Konsulting SA is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  14.00  in Biztech Konsulting SA on October 12, 2024 and sell it today you would earn a total of  4.00  from holding Biztech Konsulting SA or generate 28.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	94.74%
Values	Daily Returns

Powszechny Zaklad Ubezpieczen  vs.  Biztech Konsulting SA

Powszechny Zaklad

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Powszechny Zaklad Ubezpieczen are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Powszechny Zaklad reported solid returns over the last few months and may actually be approaching a breakup point.

Biztech Konsulting

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Biztech Konsulting SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Biztech Konsulting reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Powszechny Zaklad and Biztech Konsulting

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

The idea behind Powszechny Zaklad Ubezpieczen and Biztech Konsulting 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.