Correlation Between Polski Koncern and Develia SA

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

Diversification Opportunities for Polski Koncern and Develia SA

-0.33

Correlation Coefficient

Polski Koncern  Develia SA

Very good diversification

The 3 months correlation between Polski and Develia is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Polski Koncern Naftowy and Develia SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Develia 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 Develia SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Develia SA has no effect on the direction of Polski Koncern i.e., Polski Koncern and Develia SA go up and down completely randomly.

Pair Corralation between Polski Koncern and Develia SA

Assuming the 90 days trading horizon Polski Koncern Naftowy is expected to under-perform the Develia SA. But the stock apears to be less risky and, when comparing its historical volatility, Polski Koncern Naftowy is 1.59 times less risky than Develia SA. The stock trades about -0.09 of its potential returns per unit of risk. The Develia SA is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  512.00  in Develia SA on September 8, 2024 and sell it today you would earn a total of  71.00  from holding Develia SA or generate 13.87% return on investment over 90 days.

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

Polski Koncern Naftowy  vs.  Develia SA

Polski Koncern Naftowy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Polski Koncern Naftowy has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Develia SA

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Develia SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Develia SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Polski Koncern and Develia SA

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

The idea behind Polski Koncern Naftowy and Develia 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.

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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..