Correlation Between WIG 30 and Tauron Polska

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both WIG 30 and Tauron Polska 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 WIG 30 and Tauron Polska into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WIG 30 and Tauron Polska Energia, you can compare the effects of market volatilities on WIG 30 and Tauron Polska 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 WIG 30 with a short position of Tauron Polska. Check out your portfolio center. Please also check ongoing floating volatility patterns of WIG 30 and Tauron Polska.

Diversification Opportunities for WIG 30 and Tauron Polska

-0.6
  Correlation Coefficient

Excellent diversification

The 3 months correlation between WIG and Tauron is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding WIG 30 and Tauron Polska Energia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tauron Polska Energia and WIG 30 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 WIG 30 are associated (or correlated) with Tauron Polska. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tauron Polska Energia has no effect on the direction of WIG 30 i.e., WIG 30 and Tauron Polska go up and down completely randomly.
    Optimize

Pair Corralation between WIG 30 and Tauron Polska

Assuming the 90 days trading horizon WIG 30 is expected to generate 0.53 times more return on investment than Tauron Polska. However, WIG 30 is 1.88 times less risky than Tauron Polska. It trades about 0.09 of its potential returns per unit of risk. Tauron Polska Energia is currently generating about 0.03 per unit of risk. If you would invest  286,132  in WIG 30 on September 13, 2024 and sell it today you would earn a total of  6,227  from holding WIG 30 or generate 2.18% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

WIG 30  vs.  Tauron Polska Energia

 Performance 
       Timeline  

WIG 30 and Tauron Polska Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with WIG 30 and Tauron Polska

The main advantage of trading using opposite WIG 30 and Tauron Polska positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WIG 30 position performs unexpectedly, Tauron Polska 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 Tauron Polska will offset losses from the drop in Tauron Polska's long position.
The idea behind WIG 30 and Tauron Polska Energia 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.
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.

Other Complementary Tools

Aroon Oscillator
Analyze current equity momentum using Aroon Oscillator and other momentum ratios
Portfolio Center
All portfolio management and optimization tools to improve performance of your portfolios
Portfolio Anywhere
Track or share privately all of your investments from the convenience of any device
Price Exposure Probability
Analyze equity upside and downside potential for a given time horizon across multiple markets
Transaction History
View history of all your transactions and understand their impact on performance