Correlation Between Gamedust and KGHM Polska

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

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

Diversification Opportunities for Gamedust and KGHM Polska

-0.78

Correlation Coefficient

Gamedust  KGHM Polska

Pay attention - limited upside

The 3 months correlation between Gamedust and KGHM is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Gamedust SA and KGHM Polska Miedz in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KGHM Polska Miedz and Gamedust 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 Gamedust SA are associated (or correlated) with KGHM Polska. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KGHM Polska Miedz has no effect on the direction of Gamedust i.e., Gamedust and KGHM Polska go up and down completely randomly.

Pair Corralation between Gamedust and KGHM Polska

Assuming the 90 days trading horizon Gamedust SA is expected to under-perform the KGHM Polska. In addition to that, Gamedust is 2.46 times more volatile than KGHM Polska Miedz. It trades about -0.17 of its total potential returns per unit of risk. KGHM Polska Miedz is currently generating about 0.1 per unit of volatility. If you would invest  11,500  in KGHM Polska Miedz on December 30, 2024 and sell it today you would earn a total of  1,485  from holding KGHM Polska Miedz or generate 12.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	73.02%
Values	Daily Returns

Gamedust SA  vs.  KGHM Polska Miedz

Gamedust SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gamedust SA 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 April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

KGHM Polska Miedz

Risk-Adjusted Performance

OK

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

Pair Trading with Gamedust and KGHM Polska

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

The idea behind Gamedust SA and KGHM Polska Miedz 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.