Correlation Between Bank Polska and Text SA

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

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

Diversification Opportunities for Bank Polska and Text SA

0.68

Correlation Coefficient

Bank Polska  Text SA

Poor diversification

The 3 months correlation between Bank and Text is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Bank Polska Kasa and Text SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Text SA and Bank Polska 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 Bank Polska Kasa are associated (or correlated) with Text SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Text SA has no effect on the direction of Bank Polska i.e., Bank Polska and Text SA go up and down completely randomly.

Pair Corralation between Bank Polska and Text SA

Assuming the 90 days trading horizon Bank Polska is expected to generate 1.03 times less return on investment than Text SA. But when comparing it to its historical volatility, Bank Polska Kasa is 1.24 times less risky than Text SA. It trades about 0.12 of its potential returns per unit of risk. Text SA is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  5,136  in Text SA on April 24, 2025 and sell it today you would earn a total of  669.00  from holding Text SA or generate 13.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Bank Polska Kasa  vs.  Text SA

Bank Polska Kasa

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bank Polska Kasa are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Bank Polska reported solid returns over the last few months and may actually be approaching a breakup point.

Text SA

Risk-Adjusted Performance

OK

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

Pair Trading with Bank Polska and Text SA

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

The idea behind Bank Polska Kasa and Text 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.

Check out your portfolio center.

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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.