Correlation Between KGHM Polska and Antofagasta Plc

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

Diversification Opportunities for KGHM Polska and Antofagasta Plc

0.89

Correlation Coefficient

KGHM Polska  Antofagasta Plc

Very poor diversification

The 3 months correlation between KGHM and Antofagasta is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding KGHM Polska Miedz and Antofagasta plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Antofagasta plc 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 Antofagasta Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Antofagasta plc has no effect on the direction of KGHM Polska i.e., KGHM Polska and Antofagasta Plc go up and down completely randomly.

Pair Corralation between KGHM Polska and Antofagasta Plc

Assuming the 90 days trading horizon KGHM Polska Miedz is expected to generate 1.15 times more return on investment than Antofagasta Plc. However, KGHM Polska is 1.15 times more volatile than Antofagasta plc. It trades about 0.11 of its potential returns per unit of risk. Antofagasta plc is currently generating about 0.11 per unit of risk. If you would invest  2,743  in KGHM Polska Miedz on December 29, 2024 and sell it today you would earn a total of  452.00  from holding KGHM Polska Miedz or generate 16.48% return on investment over 90 days.

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

KGHM Polska Miedz  vs.  Antofagasta plc

KGHM Polska Miedz

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KGHM Polska Miedz are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical indicators, KGHM Polska reported solid returns over the last few months and may actually be approaching a breakup point.

Antofagasta plc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Antofagasta plc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Antofagasta Plc reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KGHM Polska and Antofagasta Plc

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

The idea behind KGHM Polska Miedz and Antofagasta plc 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.