Correlation Between Bank Polska and VOOLT SA
Can any of the company-specific risk be diversified away by investing in both Bank Polska and VOOLT SA 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 VOOLT SA 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 VOOLT SA, you can compare the effects of market volatilities on Bank Polska and VOOLT SA 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 VOOLT SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Polska and VOOLT SA.
Diversification Opportunities for Bank Polska and VOOLT SA
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and VOOLT is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Bank Polska Kasa and VOOLT SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VOOLT SA 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 VOOLT SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VOOLT SA has no effect on the direction of Bank Polska i.e., Bank Polska and VOOLT SA go up and down completely randomly.
Pair Corralation between Bank Polska and VOOLT SA
Assuming the 90 days trading horizon Bank Polska Kasa is expected to generate 0.5 times more return on investment than VOOLT SA. However, Bank Polska Kasa is 2.01 times less risky than VOOLT SA. It trades about 0.09 of its potential returns per unit of risk. VOOLT SA is currently generating about 0.04 per unit of risk. If you would invest 7,660 in Bank Polska Kasa on November 28, 2024 and sell it today you would earn a total of 9,480 from holding Bank Polska Kasa or generate 123.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.76% |
| Values | Daily Returns |
Bank Polska Kasa vs. VOOLT SA
Performance |
| Timeline |
| Bank Polska Kasa |
| VOOLT SA |
Bank Polska and VOOLT SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Polska and VOOLT SA
The main advantage of trading using opposite Bank Polska and VOOLT SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Polska position performs unexpectedly, VOOLT SA 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 VOOLT SA will offset losses from the drop in VOOLT SA's long position.| Bank Polska vs. Santander Bank Polska | Bank Polska vs. Igoria Trade SA | Bank Polska vs. Play2Chill SA | Bank Polska vs. PZ Cormay SA |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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