Correlation Between Powszechny Zaklad and Astarta Holding

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

By analyzing existing cross correlation between Powszechny Zaklad Ubezpieczen and Astarta Holding NV, you can compare the effects of market volatilities on Powszechny Zaklad and Astarta Holding 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 Powszechny Zaklad with a short position of Astarta Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Powszechny Zaklad and Astarta Holding.

Diversification Opportunities for Powszechny Zaklad and Astarta Holding

0.83

Correlation Coefficient

Powszechny Zaklad  Astarta Holding

Very poor diversification

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

Pair Corralation between Powszechny Zaklad and Astarta Holding

Assuming the 90 days trading horizon Powszechny Zaklad is expected to generate 2.82 times less return on investment than Astarta Holding. But when comparing it to its historical volatility, Powszechny Zaklad Ubezpieczen is 1.44 times less risky than Astarta Holding. It trades about 0.1 of its potential returns per unit of risk. Astarta Holding NV is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  3,150  in Astarta Holding NV on September 30, 2024 and sell it today you would earn a total of  930.00  from holding Astarta Holding NV or generate 29.52% return on investment over 90 days.

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

Powszechny Zaklad Ubezpieczen  vs.  Astarta Holding NV

Powszechny Zaklad

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Powszechny Zaklad Ubezpieczen are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Powszechny Zaklad may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Astarta Holding NV

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Astarta Holding NV are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Astarta Holding reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Powszechny Zaklad and Astarta Holding

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

The idea behind Powszechny Zaklad Ubezpieczen and Astarta Holding NV 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.