Correlation Between NMI Holdings and KGHM Polska
Can any of the company-specific risk be diversified away by investing in both NMI Holdings 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 NMI Holdings and KGHM Polska into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and KGHM Polska Miedz, you can compare the effects of market volatilities on NMI Holdings 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 NMI Holdings with a short position of KGHM Polska. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and KGHM Polska.
Diversification Opportunities for NMI Holdings and KGHM Polska
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between NMI and KGHM is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings 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 NMI Holdings 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 NMI Holdings 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 NMI Holdings i.e., NMI Holdings and KGHM Polska go up and down completely randomly.
Pair Corralation between NMI Holdings and KGHM Polska
Assuming the 90 days horizon NMI Holdings is expected to generate 0.71 times more return on investment than KGHM Polska. However, NMI Holdings is 1.4 times less risky than KGHM Polska. It trades about -0.05 of its potential returns per unit of risk. KGHM Polska Miedz is currently generating about -0.13 per unit of risk. If you would invest 3,720 in NMI Holdings on September 13, 2024 and sell it today you would lose (180.00) from holding NMI Holdings or give up 4.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NMI Holdings vs. KGHM Polska Miedz
Performance |
| Timeline |
| NMI Holdings |
| KGHM Polska Miedz |
NMI Holdings and KGHM Polska Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and KGHM Polska
The main advantage of trading using opposite NMI Holdings and KGHM Polska positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings 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.| NMI Holdings vs. JJ SNACK FOODS | NMI Holdings vs. Tradegate AG Wertpapierhandelsbank | NMI Holdings vs. JSC Halyk bank | NMI Holdings vs. VARIOUS EATERIES LS |
| KGHM Polska vs. Southern Copper | KGHM Polska vs. Sandfire Resources Limited | KGHM Polska vs. Superior Plus Corp | KGHM Polska vs. NMI Holdings |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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