Correlation Between KGHM Polska and Mo Bruk

Can any of the company-specific risk be diversified away by investing in both KGHM Polska and Mo Bruk 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 Mo Bruk 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 Mo Bruk SA, you can compare the effects of market volatilities on KGHM Polska and Mo Bruk 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 Mo Bruk. Check out your portfolio center. Please also check ongoing floating volatility patterns of KGHM Polska and Mo Bruk.

Diversification Opportunities for KGHM Polska and Mo Bruk

-0.47

Correlation Coefficient

KGHM Polska  Mo Bruk

Very good diversification

The 3 months correlation between KGHM and MBR is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding KGHM Polska Miedz and Mo Bruk SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mo Bruk 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 Mo Bruk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mo Bruk SA has no effect on the direction of KGHM Polska i.e., KGHM Polska and Mo Bruk go up and down completely randomly.

Pair Corralation between KGHM Polska and Mo Bruk

Assuming the 90 days trading horizon KGHM Polska Miedz is expected to under-perform the Mo Bruk. In addition to that, KGHM Polska is 1.06 times more volatile than Mo Bruk SA. It trades about -0.34 of its total potential returns per unit of risk. Mo Bruk SA is currently generating about 0.14 per unit of volatility. If you would invest  33,500  in Mo Bruk SA on October 11, 2024 and sell it today you would earn a total of  1,000.00  from holding Mo Bruk SA or generate 2.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.12%
Values	Daily Returns

KGHM Polska Miedz  vs.  Mo Bruk 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.

Mo Bruk SA

Risk-Adjusted Performance

7 of 100

Modest

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

Pair Trading with KGHM Polska and Mo Bruk

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

The idea behind KGHM Polska Miedz and Mo Bruk 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.