Correlation Between ING Bank and KGHM Polska
Can any of the company-specific risk be diversified away by investing in both ING Bank 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 ING Bank and KGHM Polska into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ING Bank lski and KGHM Polska Miedz, you can compare the effects of market volatilities on ING Bank 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 ING Bank with a short position of KGHM Polska. Check out your portfolio center. Please also check ongoing floating volatility patterns of ING Bank and KGHM Polska.
Diversification Opportunities for ING Bank and KGHM Polska
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ING and KGHM is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding ING Bank lski 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 ING Bank 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 ING Bank lski 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 ING Bank i.e., ING Bank and KGHM Polska go up and down completely randomly.
Pair Corralation between ING Bank and KGHM Polska
Assuming the 90 days trading horizon ING Bank lski is expected to generate 1.0 times more return on investment than KGHM Polska. However, ING Bank is 1.0 times more volatile than KGHM Polska Miedz. It trades about 0.0 of its potential returns per unit of risk. KGHM Polska Miedz is currently generating about -0.19 per unit of risk. If you would invest 26,750 in ING Bank lski on October 21, 2024 and sell it today you would lose (250.00) from holding ING Bank lski or give up 0.93% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
ING Bank lski vs. KGHM Polska Miedz
Performance |
Timeline |
ING Bank lski |
KGHM Polska Miedz |
ING Bank and KGHM Polska Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ING Bank and KGHM Polska
The main advantage of trading using opposite ING Bank and KGHM Polska positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ING Bank 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.ING Bank vs. Medicalg | ING Bank vs. GreenX Metals | ING Bank vs. Centrum Finansowe Banku | ING Bank vs. Skyline Investment SA |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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