Correlation Between Bank Polska and GI Group
Can any of the company-specific risk be diversified away by investing in both Bank Polska and GI Group 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 Bank Polska and GI Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Polska Kasa and GI Group Poland, you can compare the effects of market volatilities on Bank Polska and GI Group 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 Bank Polska with a short position of GI Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Polska and GI Group.
Diversification Opportunities for Bank Polska and GI Group
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and GIG is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Bank Polska Kasa and GI Group Poland in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GI Group Poland and Bank Polska 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 Bank Polska Kasa are associated (or correlated) with GI Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GI Group Poland has no effect on the direction of Bank Polska i.e., Bank Polska and GI Group go up and down completely randomly.
Pair Corralation between Bank Polska and GI Group
Assuming the 90 days trading horizon Bank Polska Kasa is expected to generate 0.83 times more return on investment than GI Group. However, Bank Polska Kasa is 1.2 times less risky than GI Group. It trades about 0.06 of its potential returns per unit of risk. GI Group Poland is currently generating about 0.01 per unit of risk. If you would invest 9,291 in Bank Polska Kasa on August 31, 2024 and sell it today you would earn a total of 4,274 from holding Bank Polska Kasa or generate 46.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Polska Kasa vs. GI Group Poland
Performance |
| Timeline |
| Bank Polska Kasa |
| GI Group Poland |
Bank Polska and GI Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Polska and GI Group
The main advantage of trading using opposite Bank Polska and GI Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Polska position performs unexpectedly, GI Group 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 GI Group will offset losses from the drop in GI Group's long position.| Bank Polska vs. Santander Bank Polska | Bank Polska vs. Bank Handlowy w | Bank Polska vs. Bank Ochrony rodowiska |
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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