Correlation Between Photon Energy and Orlen SA

Can any of the company-specific risk be diversified away by investing in both Photon Energy and Orlen 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 Photon Energy and Orlen SA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Photon Energy NV and Orlen SA, you can compare the effects of market volatilities on Photon Energy and Orlen 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 Photon Energy with a short position of Orlen SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Photon Energy and Orlen SA.

Diversification Opportunities for Photon Energy and Orlen SA

-0.73

Correlation Coefficient

Photon Energy  Orlen SA

Pay attention - limited upside

The 3 months correlation between Photon and Orlen is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Photon Energy NV and Orlen SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orlen SA and Photon Energy 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 Photon Energy NV are associated (or correlated) with Orlen SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orlen SA has no effect on the direction of Photon Energy i.e., Photon Energy and Orlen SA go up and down completely randomly.

Pair Corralation between Photon Energy and Orlen SA

Assuming the 90 days trading horizon Photon Energy NV is expected to under-perform the Orlen SA. In addition to that, Photon Energy is 1.14 times more volatile than Orlen SA. It trades about -0.08 of its total potential returns per unit of risk. Orlen SA is currently generating about 0.26 per unit of volatility. If you would invest  39,430  in Orlen SA on April 24, 2025 and sell it today you would earn a total of  10,185  from holding Orlen SA or generate 25.83% return on investment over 90 days.

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

Photon Energy NV  vs.  Orlen SA

Photon Energy NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days Photon Energy NV 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.

Orlen SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Orlen SA are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Orlen SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Photon Energy and Orlen SA

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

The idea behind Photon Energy NV and Orlen 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.