Correlation Between Vercom SA and Polski Koncern

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Can any of the company-specific risk be diversified away by investing in both Vercom SA and Polski Koncern 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 Vercom SA and Polski Koncern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vercom SA and Polski Koncern Naftowy, you can compare the effects of market volatilities on Vercom SA and Polski Koncern 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 Vercom SA with a short position of Polski Koncern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vercom SA and Polski Koncern.

Diversification Opportunities for Vercom SA and Polski Koncern

-0.08
  Correlation Coefficient

Good diversification

The 3 months correlation between Vercom and Polski is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Vercom SA and Polski Koncern Naftowy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polski Koncern Naftowy and Vercom SA 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 Vercom SA are associated (or correlated) with Polski Koncern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polski Koncern Naftowy has no effect on the direction of Vercom SA i.e., Vercom SA and Polski Koncern go up and down completely randomly.

Pair Corralation between Vercom SA and Polski Koncern

Assuming the 90 days trading horizon Vercom SA is expected to generate 1.43 times more return on investment than Polski Koncern. However, Vercom SA is 1.43 times more volatile than Polski Koncern Naftowy. It trades about 0.03 of its potential returns per unit of risk. Polski Koncern Naftowy is currently generating about -0.17 per unit of risk. If you would invest  11,500  in Vercom SA on September 2, 2024 and sell it today you would earn a total of  400.00  from holding Vercom SA or generate 3.48% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Vercom SA  vs.  Polski Koncern Naftowy

 Performance 
       Timeline  
Vercom SA 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Vercom SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Vercom SA is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.
Polski Koncern Naftowy 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Polski Koncern Naftowy 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.

Vercom SA and Polski Koncern Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Vercom SA and Polski Koncern

The main advantage of trading using opposite Vercom SA and Polski Koncern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vercom SA position performs unexpectedly, Polski Koncern 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 Polski Koncern will offset losses from the drop in Polski Koncern's long position.
The idea behind Vercom SA and Polski Koncern Naftowy 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

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