Correlation Between ING Bank and Bank Polska

Can any of the company-specific risk be diversified away by investing in both ING Bank and Bank 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 ING Bank and Bank Polska into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ING Bank lski and Bank Polska Kasa, you can compare the effects of market volatilities on ING Bank and Bank 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 ING Bank with a short position of Bank Polska. Check out your portfolio center. Please also check ongoing floating volatility patterns of ING Bank and Bank Polska.

Diversification Opportunities for ING Bank and Bank Polska

0.66

Correlation Coefficient

ING Bank  Bank Polska

Poor diversification

The 3 months correlation between ING and Bank is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding ING Bank lski and Bank Polska Kasa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Polska Kasa and ING Bank 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 ING Bank lski are associated (or correlated) with Bank Polska. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Polska Kasa has no effect on the direction of ING Bank i.e., ING Bank and Bank Polska go up and down completely randomly.

Pair Corralation between ING Bank and Bank Polska

Assuming the 90 days trading horizon ING Bank lski is expected to under-perform the Bank Polska. But the stock apears to be less risky and, when comparing its historical volatility, ING Bank lski is 1.13 times less risky than Bank Polska. The stock trades about -0.03 of its potential returns per unit of risk. The Bank Polska Kasa is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  14,885  in Bank Polska Kasa on September 15, 2024 and sell it today you would lose (355.00) from holding Bank Polska Kasa or give up 2.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

ING Bank lski  vs.  Bank Polska Kasa

ING Bank lski

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ING Bank lski has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, ING Bank is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Bank Polska Kasa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bank Polska Kasa has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Bank Polska is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with ING Bank and Bank Polska

The main advantage of trading using opposite ING Bank and Bank Polska positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ING Bank position performs unexpectedly, Bank 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 Bank Polska will offset losses from the drop in Bank Polska's long position.

The idea behind ING Bank lski and Bank Polska Kasa 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.