Correlation Between KGHM Polska and Santander Bank

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

Diversification Opportunities for KGHM Polska and Santander Bank

-0.21

Correlation Coefficient

KGHM Polska  Santander Bank

Very good diversification

The 3 months correlation between KGHM and Santander is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding KGHM Polska Miedz and Santander Bank Polska in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Santander Bank Polska 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 Santander Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Santander Bank Polska has no effect on the direction of KGHM Polska i.e., KGHM Polska and Santander Bank go up and down completely randomly.

Pair Corralation between KGHM Polska and Santander Bank

Assuming the 90 days trading horizon KGHM Polska Miedz is expected to generate 1.12 times more return on investment than Santander Bank. However, KGHM Polska is 1.12 times more volatile than Santander Bank Polska. It trades about -0.05 of its potential returns per unit of risk. Santander Bank Polska is currently generating about -0.13 per unit of risk. If you would invest  13,895  in KGHM Polska Miedz on August 31, 2024 and sell it today you would lose (1,160) from holding KGHM Polska Miedz or give up 8.35% of portfolio value over 90 days.

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

KGHM Polska Miedz  vs.  Santander Bank Polska

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 latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Santander Bank Polska

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Santander Bank Polska 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 December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with KGHM Polska and Santander Bank

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

The idea behind KGHM Polska Miedz and Santander Bank Polska 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.