Correlation Between KGHM Polska and SEI INVESTMENTS

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

Diversification Opportunities for KGHM Polska and SEI INVESTMENTS

-0.93

Correlation Coefficient

KGHM Polska  SEI INVESTMENTS

Pay attention - limited upside

The 3 months correlation between KGHM and SEI is -0.93. Overlapping area represents the amount of risk that can be diversified away by holding KGHM Polska Miedz and SEI INVESTMENTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEI INVESTMENTS 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 SEI INVESTMENTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEI INVESTMENTS has no effect on the direction of KGHM Polska i.e., KGHM Polska and SEI INVESTMENTS go up and down completely randomly.

Pair Corralation between KGHM Polska and SEI INVESTMENTS

Assuming the 90 days trading horizon KGHM Polska is expected to generate 3.14 times less return on investment than SEI INVESTMENTS. In addition to that, KGHM Polska is 2.73 times more volatile than SEI INVESTMENTS. It trades about 0.01 of its total potential returns per unit of risk. SEI INVESTMENTS is currently generating about 0.09 per unit of volatility. If you would invest  5,486  in SEI INVESTMENTS on October 4, 2024 and sell it today you would earn a total of  2,514  from holding SEI INVESTMENTS or generate 45.83% 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.  SEI INVESTMENTS

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.

SEI INVESTMENTS

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SEI INVESTMENTS are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, SEI INVESTMENTS unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KGHM Polska and SEI INVESTMENTS

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

The idea behind KGHM Polska Miedz and SEI INVESTMENTS 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.