Correlation Between Stalprodukt and Powszechny Zaklad

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

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

Diversification Opportunities for Stalprodukt and Powszechny Zaklad

-0.5

Correlation Coefficient

Stalprodukt  Powszechny Zaklad

Very good diversification

The 3 months correlation between Stalprodukt and Powszechny is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Stalprodukt SA and Powszechny Zaklad Ubezpieczen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Powszechny Zaklad and Stalprodukt 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 Stalprodukt SA are associated (or correlated) with Powszechny Zaklad. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Powszechny Zaklad has no effect on the direction of Stalprodukt i.e., Stalprodukt and Powszechny Zaklad go up and down completely randomly.

Pair Corralation between Stalprodukt and Powszechny Zaklad

Assuming the 90 days trading horizon Stalprodukt SA is expected to under-perform the Powszechny Zaklad. But the stock apears to be less risky and, when comparing its historical volatility, Stalprodukt SA is 1.93 times less risky than Powszechny Zaklad. The stock trades about -0.07 of its potential returns per unit of risk. The Powszechny Zaklad Ubezpieczen is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  4,332  in Powszechny Zaklad Ubezpieczen on September 23, 2024 and sell it today you would earn a total of  278.00  from holding Powszechny Zaklad Ubezpieczen or generate 6.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Stalprodukt SA  vs.  Powszechny Zaklad Ubezpieczen

Stalprodukt SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stalprodukt SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Powszechny Zaklad

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Powszechny Zaklad Ubezpieczen are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Powszechny Zaklad may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Stalprodukt and Powszechny Zaklad

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

The idea behind Stalprodukt SA and Powszechny Zaklad Ubezpieczen 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.