Correlation Between KGHM Polska and Atlantis

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

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

Diversification Opportunities for KGHM Polska and Atlantis

-0.64

Correlation Coefficient

KGHM Polska  Atlantis

Excellent diversification

The 3 months correlation between KGHM and Atlantis is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding KGHM Polska Miedz and Atlantis SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlantis SA and KGHM 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 KGHM Polska Miedz are associated (or correlated) with Atlantis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlantis SA has no effect on the direction of KGHM Polska i.e., KGHM Polska and Atlantis go up and down completely randomly.

Pair Corralation between KGHM Polska and Atlantis

Assuming the 90 days trading horizon KGHM Polska is expected to generate 7.12 times less return on investment than Atlantis. But when comparing it to its historical volatility, KGHM Polska Miedz is 5.18 times less risky than Atlantis. It trades about 0.41 of its potential returns per unit of risk. Atlantis SA is currently generating about 0.57 of returns per unit of risk over similar time horizon. If you would invest  13.00  in Atlantis SA on October 23, 2024 and sell it today you would earn a total of  9.00  from holding Atlantis SA or generate 69.23% return on investment over 90 days.

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

KGHM Polska Miedz  vs.  Atlantis SA

KGHM Polska Miedz

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KGHM Polska Miedz 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 February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Atlantis SA

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Atlantis SA are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Atlantis reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KGHM Polska and Atlantis

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

The idea behind KGHM Polska Miedz and Atlantis 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.