Correlation Between KGHM Polska and DEVRY EDUCATION

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

Diversification Opportunities for KGHM Polska and DEVRY EDUCATION

-0.91

Correlation Coefficient

KGHM Polska  DEVRY EDUCATION

Pay attention - limited upside

The 3 months correlation between KGHM and DEVRY is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding KGHM Polska Miedz and DEVRY EDUCATION GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DEVRY EDUCATION GRP 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 DEVRY EDUCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DEVRY EDUCATION GRP has no effect on the direction of KGHM Polska i.e., KGHM Polska and DEVRY EDUCATION go up and down completely randomly.

Pair Corralation between KGHM Polska and DEVRY EDUCATION

Assuming the 90 days trading horizon KGHM Polska Miedz is expected to under-perform the DEVRY EDUCATION. In addition to that, KGHM Polska is 1.04 times more volatile than DEVRY EDUCATION GRP. It trades about -0.07 of its total potential returns per unit of risk. DEVRY EDUCATION GRP is currently generating about 0.11 per unit of volatility. If you would invest  6,250  in DEVRY EDUCATION GRP on October 4, 2024 and sell it today you would earn a total of  2,300  from holding DEVRY EDUCATION GRP or generate 36.8% return on investment over 90 days.

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

KGHM Polska Miedz  vs.  DEVRY EDUCATION GRP

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.

DEVRY EDUCATION GRP

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DEVRY EDUCATION GRP are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, DEVRY EDUCATION unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KGHM Polska and DEVRY EDUCATION

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

The idea behind KGHM Polska Miedz and DEVRY EDUCATION GRP 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.