Correlation Between KGHM Polska and J+J SNACK

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

Diversification Opportunities for KGHM Polska and J+J SNACK

-0.78

Correlation Coefficient

KGHM Polska  J+J SNACK

Pay attention - limited upside

The 3 months correlation between KGHM and J+J is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding KGHM Polska Miedz and JJ SNACK FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JJ SNACK FOODS 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 J+J SNACK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JJ SNACK FOODS has no effect on the direction of KGHM Polska i.e., KGHM Polska and J+J SNACK go up and down completely randomly.

Pair Corralation between KGHM Polska and J+J SNACK

Assuming the 90 days trading horizon KGHM Polska Miedz is expected to generate 1.7 times more return on investment than J+J SNACK. However, KGHM Polska is 1.7 times more volatile than JJ SNACK FOODS. It trades about 0.03 of its potential returns per unit of risk. JJ SNACK FOODS is currently generating about 0.03 per unit of risk. If you would invest  2,630  in KGHM Polska Miedz on September 19, 2024 and sell it today you would earn a total of  239.00  from holding KGHM Polska Miedz or generate 9.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.6%
Values	Daily Returns

KGHM Polska Miedz  vs.  JJ SNACK FOODS

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

JJ SNACK FOODS

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JJ SNACK FOODS are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, J+J SNACK may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with KGHM Polska and J+J SNACK

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

The idea behind KGHM Polska Miedz and JJ SNACK FOODS 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.