Correlation Between Polski Koncern and Tatry Mountain

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

Diversification Opportunities for Polski Koncern and Tatry Mountain

-0.83

Correlation Coefficient

Polski Koncern  Tatry Mountain

Pay attention - limited upside

The 3 months correlation between Polski and Tatry is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Polski Koncern Naftowy and Tatry Mountain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tatry Mountain 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 Tatry Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tatry Mountain has no effect on the direction of Polski Koncern i.e., Polski Koncern and Tatry Mountain go up and down completely randomly.

Pair Corralation between Polski Koncern and Tatry Mountain

Assuming the 90 days trading horizon Polski Koncern Naftowy is expected to under-perform the Tatry Mountain. In addition to that, Polski Koncern is 1.43 times more volatile than Tatry Mountain. It trades about -0.12 of its total potential returns per unit of risk. Tatry Mountain is currently generating about 0.15 per unit of volatility. If you would invest  9,600  in Tatry Mountain on September 15, 2024 and sell it today you would earn a total of  1,100  from holding Tatry Mountain or generate 11.46% return on investment over 90 days.

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

Polski Koncern Naftowy  vs.  Tatry Mountain

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 January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Tatry Mountain

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tatry Mountain are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Tatry Mountain may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Polski Koncern and Tatry Mountain

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

The idea behind Polski Koncern Naftowy and Tatry Mountain 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.