Correlation Between KGHM Polska and MAVEN WIRELESS

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

Diversification Opportunities for KGHM Polska and MAVEN WIRELESS

0.75

Correlation Coefficient

KGHM Polska  MAVEN WIRELESS

Poor diversification

The 3 months correlation between KGHM and MAVEN is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding KGHM Polska Miedz and MAVEN WIRELESS SWEDEN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAVEN WIRELESS SWEDEN 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 MAVEN WIRELESS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAVEN WIRELESS SWEDEN has no effect on the direction of KGHM Polska i.e., KGHM Polska and MAVEN WIRELESS go up and down completely randomly.

Pair Corralation between KGHM Polska and MAVEN WIRELESS

Assuming the 90 days trading horizon KGHM Polska Miedz is expected to under-perform the MAVEN WIRELESS. But the stock apears to be less risky and, when comparing its historical volatility, KGHM Polska Miedz is 2.14 times less risky than MAVEN WIRELESS. The stock trades about -0.45 of its potential returns per unit of risk. The MAVEN WIRELESS SWEDEN is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  80.00  in MAVEN WIRELESS SWEDEN on October 8, 2024 and sell it today you would earn a total of  9.00  from holding MAVEN WIRELESS SWEDEN or generate 11.25% return on investment over 90 days.

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

KGHM Polska Miedz  vs.  MAVEN WIRELESS SWEDEN

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. Despite fragile performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

MAVEN WIRELESS SWEDEN

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MAVEN WIRELESS SWEDEN has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with KGHM Polska and MAVEN WIRELESS

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

The idea behind KGHM Polska Miedz and MAVEN WIRELESS SWEDEN 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 CEOs Directory module to screen CEOs from public companies around the world.