Correlation Between Bank Polska and PLAYWAY SA

Can any of the company-specific risk be diversified away by investing in both Bank Polska and PLAYWAY 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 PLAYWAY 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 PLAYWAY SA, you can compare the effects of market volatilities on Bank Polska and PLAYWAY 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 PLAYWAY SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Polska and PLAYWAY SA.

Diversification Opportunities for Bank Polska and PLAYWAY SA

0.42

Correlation Coefficient

Bank Polska  PLAYWAY SA

Very weak diversification

The 3 months correlation between Bank and PLAYWAY is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Bank Polska Kasa and PLAYWAY SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLAYWAY 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 PLAYWAY SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PLAYWAY SA has no effect on the direction of Bank Polska i.e., Bank Polska and PLAYWAY SA go up and down completely randomly.

Pair Corralation between Bank Polska and PLAYWAY SA

Assuming the 90 days trading horizon Bank Polska Kasa is expected to under-perform the PLAYWAY SA. In addition to that, Bank Polska is 1.34 times more volatile than PLAYWAY SA. It trades about -0.02 of its total potential returns per unit of risk. PLAYWAY SA is currently generating about 0.08 per unit of volatility. If you would invest  26,900  in PLAYWAY SA on September 29, 2024 and sell it today you would earn a total of  600.00  from holding PLAYWAY SA or generate 2.23% return on investment over 90 days.

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

Bank Polska Kasa  vs.  PLAYWAY SA

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.

PLAYWAY SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PLAYWAY SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, PLAYWAY SA 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 Bank Polska and PLAYWAY SA

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

The idea behind Bank Polska Kasa and PLAYWAY SA 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .