Correlation Between KGHM Polska and Ailleron
Can any of the company-specific risk be diversified away by investing in both KGHM Polska and Ailleron 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 Ailleron 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 Ailleron SA, you can compare the effects of market volatilities on KGHM Polska and Ailleron 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 Ailleron. Check out your portfolio center. Please also check ongoing floating volatility patterns of KGHM Polska and Ailleron.
Diversification Opportunities for KGHM Polska and Ailleron
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KGHM and Ailleron is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding KGHM Polska Miedz and Ailleron SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ailleron 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 Ailleron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ailleron SA has no effect on the direction of KGHM Polska i.e., KGHM Polska and Ailleron go up and down completely randomly.
Pair Corralation between KGHM Polska and Ailleron
Assuming the 90 days trading horizon KGHM Polska Miedz is expected to under-perform the Ailleron. In addition to that, KGHM Polska is 1.03 times more volatile than Ailleron SA. It trades about -0.58 of its total potential returns per unit of risk. Ailleron SA is currently generating about 0.37 per unit of volatility. If you would invest 2,035 in Ailleron SA on October 9, 2024 and sell it today you would earn a total of 165.00 from holding Ailleron SA or generate 8.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KGHM Polska Miedz vs. Ailleron SA
Performance |
| Timeline |
| KGHM Polska Miedz |
| Ailleron SA |
KGHM Polska and Ailleron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KGHM Polska and Ailleron
The main advantage of trading using opposite KGHM Polska and Ailleron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KGHM Polska position performs unexpectedly, Ailleron 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 Ailleron will offset losses from the drop in Ailleron's long position.| KGHM Polska vs. Marie Brizard Wine | KGHM Polska vs. Drago entertainment SA | KGHM Polska vs. Cloud Technologies SA | KGHM Polska vs. Mlk Foods Public |
| Ailleron vs. Cloud Technologies SA | Ailleron vs. Asseco Business Solutions | Ailleron vs. Asseco South Eastern | Ailleron vs. Vercom 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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