Correlation Between KGHM Polska and Powszechna Kasa

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

Diversification Opportunities for KGHM Polska and Powszechna Kasa

-0.37

Correlation Coefficient

KGHM Polska  Powszechna Kasa

Very good diversification

The 3 months correlation between KGHM and Powszechna is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding KGHM Polska Miedz and Powszechna Kasa Oszczednosci in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Powszechna Kasa Oszc 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 Powszechna Kasa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Powszechna Kasa Oszc has no effect on the direction of KGHM Polska i.e., KGHM Polska and Powszechna Kasa go up and down completely randomly.

Pair Corralation between KGHM Polska and Powszechna Kasa

Assuming the 90 days trading horizon KGHM Polska Miedz is expected to under-perform the Powszechna Kasa. In addition to that, KGHM Polska is 1.21 times more volatile than Powszechna Kasa Oszczednosci. It trades about -0.01 of its total potential returns per unit of risk. Powszechna Kasa Oszczednosci is currently generating about 0.08 per unit of volatility. If you would invest  3,189  in Powszechna Kasa Oszczednosci on September 30, 2024 and sell it today you would earn a total of  2,791  from holding Powszechna Kasa Oszczednosci or generate 87.52% return on investment over 90 days.

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

KGHM Polska Miedz  vs.  Powszechna Kasa Oszczednosci

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 January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Powszechna Kasa Oszc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Powszechna Kasa Oszczednosci are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Powszechna Kasa may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with KGHM Polska and Powszechna Kasa

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

The idea behind KGHM Polska Miedz and Powszechna Kasa Oszczednosci 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.