Correlation Between Polski Koncern and ING Bank

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

Diversification Opportunities for Polski Koncern and ING Bank

0.67

Correlation Coefficient

Polski Koncern  ING Bank

Poor diversification

The 3 months correlation between Polski and ING is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Polski Koncern Naftowy and ING Bank lski in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ING Bank lski 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 ING Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ING Bank lski has no effect on the direction of Polski Koncern i.e., Polski Koncern and ING Bank go up and down completely randomly.

Pair Corralation between Polski Koncern and ING Bank

Assuming the 90 days trading horizon Polski Koncern Naftowy is expected to under-perform the ING Bank. But the stock apears to be less risky and, when comparing its historical volatility, Polski Koncern Naftowy is 1.25 times less risky than ING Bank. The stock trades about -0.17 of its potential returns per unit of risk. The ING Bank lski is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest  27,600  in ING Bank lski on August 31, 2024 and sell it today you would lose (4,400) from holding ING Bank lski or give up 15.94% of portfolio value over 90 days.

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

Polski Koncern Naftowy  vs.  ING Bank lski

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 weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

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 weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Polski Koncern and ING Bank

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

The idea behind Polski Koncern Naftowy and ING Bank lski 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .