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
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KGHM and Allegroeu is 0.74. 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 under-perform the Allegroeu. But the stock apears to be less risky and, when comparing its historical volatility, KGHM Polska Miedz is 1.18 times less risky than Allegroeu. The stock trades about -0.05 of its potential returns per unit of risk. The Allegroeu SA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,899 in Allegroeu SA on November 3, 2024 and sell it today you would earn a total of 102.00 from holding Allegroeu SA or generate 3.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| 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. ING Bank lski | KGHM Polska vs. SOFTWARE MANSION SPOLKA | KGHM Polska vs. Igoria Trade SA | KGHM Polska vs. UniCredit SpA |
| Allegroeu vs. LSI Software SA | Allegroeu vs. Igoria Trade SA | Allegroeu vs. Creotech Instruments SA | Allegroeu 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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