Correlation Between Polski Koncern and Erbud SA
Can any of the company-specific risk be diversified away by investing in both Polski Koncern and Erbud 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 Polski Koncern and Erbud SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Polski Koncern Naftowy and Erbud SA, you can compare the effects of market volatilities on Polski Koncern and Erbud 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 Polski Koncern with a short position of Erbud SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polski Koncern and Erbud SA.
Diversification Opportunities for Polski Koncern and Erbud SA
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Polski and Erbud is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Polski Koncern Naftowy and Erbud SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erbud SA and Polski Koncern 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 Polski Koncern Naftowy are associated (or correlated) with Erbud SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erbud SA has no effect on the direction of Polski Koncern i.e., Polski Koncern and Erbud SA go up and down completely randomly.
Pair Corralation between Polski Koncern and Erbud SA
Assuming the 90 days trading horizon Polski Koncern Naftowy is expected to under-perform the Erbud SA. But the stock apears to be less risky and, when comparing its historical volatility, Polski Koncern Naftowy is 1.22 times less risky than Erbud SA. The stock trades about -0.06 of its potential returns per unit of risk. The Erbud SA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3,210 in Erbud SA on September 2, 2024 and sell it today you would earn a total of 70.00 from holding Erbud SA or generate 2.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Polski Koncern Naftowy vs. Erbud SA
Performance |
| Timeline |
| Polski Koncern Naftowy |
| Erbud SA |
Polski Koncern and Erbud SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Polski Koncern and Erbud SA
The main advantage of trading using opposite Polski Koncern and Erbud SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polski Koncern position performs unexpectedly, Erbud 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 Erbud SA will offset losses from the drop in Erbud SA's long position.| Polski Koncern vs. Echo Investment SA | Polski Koncern vs. Esotiq Henderson SA | Polski Koncern vs. Asseco South Eastern | Polski Koncern vs. Vercom SA |
| Erbud SA vs. Banco Santander SA | Erbud SA vs. UniCredit SpA | Erbud SA vs. CEZ as | Erbud SA vs. Polski Koncern Naftowy |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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