Correlation Between KGHM Polska and DISTRICT METALS
Can any of the company-specific risk be diversified away by investing in both KGHM Polska and DISTRICT METALS 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 DISTRICT METALS 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 DISTRICT METALS, you can compare the effects of market volatilities on KGHM Polska and DISTRICT METALS 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 DISTRICT METALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of KGHM Polska and DISTRICT METALS.
Diversification Opportunities for KGHM Polska and DISTRICT METALS
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between KGHM and DISTRICT is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding KGHM Polska Miedz and DISTRICT METALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DISTRICT METALS 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 DISTRICT METALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DISTRICT METALS has no effect on the direction of KGHM Polska i.e., KGHM Polska and DISTRICT METALS go up and down completely randomly.
Pair Corralation between KGHM Polska and DISTRICT METALS
Assuming the 90 days trading horizon KGHM Polska Miedz is expected to under-perform the DISTRICT METALS. But the stock apears to be less risky and, when comparing its historical volatility, KGHM Polska Miedz is 1.88 times less risky than DISTRICT METALS. The stock trades about -0.15 of its potential returns per unit of risk. The DISTRICT METALS is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 23.00 in DISTRICT METALS on September 24, 2024 and sell it today you would earn a total of 1.00 from holding DISTRICT METALS or generate 4.35% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
KGHM Polska Miedz vs. DISTRICT METALS
Performance |
Timeline |
KGHM Polska Miedz |
DISTRICT METALS |
KGHM Polska and DISTRICT METALS Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with KGHM Polska and DISTRICT METALS
The main advantage of trading using opposite KGHM Polska and DISTRICT METALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KGHM Polska position performs unexpectedly, DISTRICT METALS 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 DISTRICT METALS will offset losses from the drop in DISTRICT METALS's long position.KGHM Polska vs. DISTRICT METALS | KGHM Polska vs. MOVIE GAMES SA | KGHM Polska vs. ARDAGH METAL PACDL 0001 | KGHM Polska vs. Dave Busters Entertainment |
DISTRICT METALS vs. Rio Tinto Group | DISTRICT METALS vs. Anglo American plc | DISTRICT METALS vs. Liontown Resources Limited | DISTRICT METALS vs. NEXA RESOURCES SA |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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