Correlation Between Allegroeu and KGHM Polska
Can any of the company-specific risk be diversified away by investing in both Allegroeu 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 Allegroeu and KGHM Polska into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allegroeu SA and KGHM Polska Miedz, you can compare the effects of market volatilities on Allegroeu 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 Allegroeu with a short position of KGHM Polska. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allegroeu and KGHM Polska.
Diversification Opportunities for Allegroeu and KGHM Polska
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Allegroeu and KGHM is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Allegroeu 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 Allegroeu 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 Allegroeu 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 Allegroeu i.e., Allegroeu and KGHM Polska go up and down completely randomly.
Pair Corralation between Allegroeu and KGHM Polska
Assuming the 90 days trading horizon Allegroeu SA is expected to under-perform the KGHM Polska. But the stock apears to be less risky and, when comparing its historical volatility, Allegroeu SA is 1.06 times less risky than KGHM Polska. The stock trades about 0.0 of its potential returns per unit of risk. The KGHM Polska Miedz is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 10,993 in KGHM Polska Miedz on August 28, 2024 and sell it today you would earn a total of 2,002 from holding KGHM Polska Miedz or generate 18.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Allegroeu SA vs. KGHM Polska Miedz
Performance |
| Timeline |
| Allegroeu SA |
| KGHM Polska Miedz |
Allegroeu and KGHM Polska Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allegroeu and KGHM Polska
The main advantage of trading using opposite Allegroeu and KGHM Polska positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allegroeu 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.| Allegroeu vs. True Games Syndicate | Allegroeu vs. Live Motion Games | Allegroeu vs. Movie Games SA | Allegroeu vs. Monnari Trade SA |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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