Correlation Between KGHM Polska and Quantum Software

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

Diversification Opportunities for KGHM Polska and Quantum Software

0.06

Correlation Coefficient

KGHM Polska  Quantum Software

Significant diversification

The 3 months correlation between KGHM and Quantum is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding KGHM Polska Miedz and Quantum Software SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quantum Software 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 Quantum Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quantum Software has no effect on the direction of KGHM Polska i.e., KGHM Polska and Quantum Software go up and down completely randomly.

Pair Corralation between KGHM Polska and Quantum Software

Assuming the 90 days trading horizon KGHM Polska Miedz is expected to generate 0.6 times more return on investment than Quantum Software. However, KGHM Polska Miedz is 1.67 times less risky than Quantum Software. It trades about 0.07 of its potential returns per unit of risk. Quantum Software SA is currently generating about -0.11 per unit of risk. If you would invest  12,735  in KGHM Polska Miedz on November 28, 2024 and sell it today you would earn a total of  885.00  from holding KGHM Polska Miedz or generate 6.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

KGHM Polska Miedz  vs.  Quantum Software SA

KGHM Polska Miedz

Risk-Adjusted Performance

Insignificant

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

Quantum Software

Risk-Adjusted Performance

Very Weak

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

Pair Trading with KGHM Polska and Quantum Software

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

The idea behind KGHM Polska Miedz and Quantum Software 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.