Correlation Between KGHM Polska and Allegroeu
Can any of the company-specific risk be diversified away by investing in both KGHM Polska and Allegroeu 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 Allegroeu 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 Allegroeu SA, you can compare the effects of market volatilities on KGHM Polska and Allegroeu 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 Allegroeu. Check out your portfolio center. Please also check ongoing floating volatility patterns of KGHM Polska and Allegroeu.
Diversification Opportunities for KGHM Polska and Allegroeu
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between KGHM and Allegroeu is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding KGHM Polska Miedz and Allegroeu SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegroeu SA 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 Allegroeu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allegroeu SA has no effect on the direction of KGHM Polska i.e., KGHM Polska and Allegroeu go up and down completely randomly.
Pair Corralation between KGHM Polska and Allegroeu
Assuming the 90 days trading horizon KGHM Polska Miedz is expected to generate 1.06 times more return on investment than Allegroeu. However, KGHM Polska is 1.06 times more volatile than Allegroeu SA. It trades about 0.03 of its potential returns per unit of risk. Allegroeu SA is currently generating about 0.0 per unit of risk. 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 |
KGHM Polska Miedz vs. Allegroeu SA
Performance |
| Timeline |
| KGHM Polska Miedz |
| Allegroeu SA |
KGHM Polska and Allegroeu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KGHM Polska and Allegroeu
The main advantage of trading using opposite KGHM Polska and Allegroeu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KGHM Polska position performs unexpectedly, Allegroeu 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 Allegroeu will offset losses from the drop in Allegroeu's long position.| KGHM Polska vs. Cloud Technologies SA | KGHM Polska vs. Ultimate Games SA | KGHM Polska vs. Gamedust SA | KGHM Polska vs. UF Games SA |
| Allegroeu vs. True Games Syndicate | Allegroeu vs. Live Motion Games | Allegroeu vs. Movie Games SA | Allegroeu vs. Monnari Trade SA |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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