Correlation Between Movie Games and KGHM Polska

Can any of the company-specific risk be diversified away by investing in both Movie Games and KGHM Polska 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 Movie Games and KGHM Polska into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Movie Games SA and KGHM Polska Miedz, you can compare the effects of market volatilities on Movie Games and KGHM Polska 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 Movie Games with a short position of KGHM Polska. Check out your portfolio center. Please also check ongoing floating volatility patterns of Movie Games and KGHM Polska.

Diversification Opportunities for Movie Games and KGHM Polska

0.5

Correlation Coefficient

Movie Games  KGHM Polska

Very weak diversification

The 3 months correlation between Movie and KGHM is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Movie Games SA and KGHM Polska Miedz in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KGHM Polska Miedz and Movie Games 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 Movie Games SA are associated (or correlated) with KGHM Polska. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KGHM Polska Miedz has no effect on the direction of Movie Games i.e., Movie Games and KGHM Polska go up and down completely randomly.

Pair Corralation between Movie Games and KGHM Polska

Assuming the 90 days trading horizon Movie Games SA is expected to under-perform the KGHM Polska. But the stock apears to be less risky and, when comparing its historical volatility, Movie Games SA is 1.14 times less risky than KGHM Polska. The stock trades about -0.36 of its potential returns per unit of risk. The KGHM Polska Miedz is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  13,860  in KGHM Polska Miedz on September 15, 2024 and sell it today you would lose (1,160) from holding KGHM Polska Miedz or give up 8.37% of portfolio value over 90 days.

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

Movie Games SA  vs.  KGHM Polska Miedz

Movie Games SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Movie Games SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

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. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Movie Games and KGHM Polska

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

The idea behind Movie Games SA and KGHM Polska Miedz 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.

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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.