Correlation Between KGHM Polska and 11 Bit
Can any of the company-specific risk be diversified away by investing in both KGHM Polska and 11 Bit 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 KGHM Polska and 11 Bit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KGHM Polska Miedz and 11 bit studios, you can compare the effects of market volatilities on KGHM Polska and 11 Bit 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 KGHM Polska with a short position of 11 Bit. Check out your portfolio center. Please also check ongoing floating volatility patterns of KGHM Polska and 11 Bit.
Diversification Opportunities for KGHM Polska and 11 Bit
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between KGHM and 11B is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding KGHM Polska Miedz and 11 bit studios in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 11 bit studios and KGHM Polska 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 KGHM Polska Miedz are associated (or correlated) with 11 Bit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 11 bit studios has no effect on the direction of KGHM Polska i.e., KGHM Polska and 11 Bit go up and down completely randomly.
Pair Corralation between KGHM Polska and 11 Bit
Assuming the 90 days trading horizon KGHM Polska Miedz is expected to under-perform the 11 Bit. In addition to that, KGHM Polska is 1.29 times more volatile than 11 bit studios. It trades about -0.31 of its total potential returns per unit of risk. 11 bit studios is currently generating about -0.12 per unit of volatility. If you would invest 26,000 in 11 bit studios on August 26, 2024 and sell it today you would lose (1,400) from holding 11 bit studios or give up 5.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KGHM Polska Miedz vs. 11 bit studios
Performance |
| Timeline |
| KGHM Polska Miedz |
| 11 bit studios |
KGHM Polska and 11 Bit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KGHM Polska and 11 Bit
The main advantage of trading using opposite KGHM Polska and 11 Bit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KGHM Polska position performs unexpectedly, 11 Bit 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 11 Bit will offset losses from the drop in 11 Bit's long position.| KGHM Polska vs. Marie Brizard Wine | KGHM Polska vs. Quantum Software SA | KGHM Polska vs. SOFTWARE MANSION SPOLKA | KGHM Polska vs. Mlk Foods Public |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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