Correlation Between Perusahaan Perseroan and KGHM Polska

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

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

Diversification Opportunities for Perusahaan Perseroan and KGHM Polska

-0.44

Correlation Coefficient

Perusahaan Perseroan  KGHM Polska

Very good diversification

The 3 months correlation between Perusahaan and KGHM is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Perusahaan Perseroan PT 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 Perusahaan Perseroan 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 Perusahaan Perseroan PT 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 Perusahaan Perseroan i.e., Perusahaan Perseroan and KGHM Polska go up and down completely randomly.

Pair Corralation between Perusahaan Perseroan and KGHM Polska

Assuming the 90 days horizon Perusahaan Perseroan PT is expected to under-perform the KGHM Polska. But the stock apears to be less risky and, when comparing its historical volatility, Perusahaan Perseroan PT is 1.19 times less risky than KGHM Polska. The stock trades about -0.11 of its potential returns per unit of risk. The KGHM Polska Miedz is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  3,031  in KGHM Polska Miedz on December 10, 2024 and sell it today you would earn a total of  50.00  from holding KGHM Polska Miedz or generate 1.65% return on investment over 90 days.

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

Perusahaan Perseroan PT  vs.  KGHM Polska Miedz

Perusahaan Perseroan

Risk-Adjusted Performance

Very Weak

Over the last 90 days Perusahaan Perseroan PT 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 basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

KGHM Polska Miedz

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KGHM Polska Miedz are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical indicators, KGHM Polska is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Perusahaan Perseroan and KGHM Polska

The main advantage of trading using opposite Perusahaan Perseroan and KGHM Polska positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Perusahaan Perseroan 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 Perusahaan Perseroan PT 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.

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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.