Correlation Between First Quantum and KGHM Polska
Can any of the company-specific risk be diversified away by investing in both First Quantum 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 First Quantum and KGHM Polska into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Quantum Minerals and KGHM Polska Miedz, you can compare the effects of market volatilities on First Quantum 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 First Quantum with a short position of KGHM Polska. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Quantum and KGHM Polska.
Diversification Opportunities for First Quantum and KGHM Polska
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and KGHM is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding First Quantum Minerals 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 First Quantum 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 First Quantum Minerals 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 First Quantum i.e., First Quantum and KGHM Polska go up and down completely randomly.
Pair Corralation between First Quantum and KGHM Polska
Assuming the 90 days horizon First Quantum Minerals is expected to generate 1.25 times more return on investment than KGHM Polska. However, First Quantum is 1.25 times more volatile than KGHM Polska Miedz. It trades about 0.04 of its potential returns per unit of risk. KGHM Polska Miedz is currently generating about 0.01 per unit of risk. If you would invest 1,121 in First Quantum Minerals on November 2, 2024 and sell it today you would earn a total of 77.00 from holding First Quantum Minerals or generate 6.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.04% |
| Values | Daily Returns |
First Quantum Minerals vs. KGHM Polska Miedz
Performance |
| Timeline |
| First Quantum Minerals |
| KGHM Polska Miedz |
First Quantum and KGHM Polska Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Quantum and KGHM Polska
The main advantage of trading using opposite First Quantum and KGHM Polska positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Quantum 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.| First Quantum vs. Agilent Technologies | First Quantum vs. ALERION CLEANPOWER | First Quantum vs. ULTRA CLEAN HLDGS | First Quantum vs. Allegheny Technologies Incorporated |
| KGHM Polska vs. Safety Insurance Group | KGHM Polska vs. Prosiebensat 1 Media | KGHM Polska vs. SQUIRREL MEDIA SA | KGHM Polska vs. HANOVER INSURANCE |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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