Correlation Between KGHM Polska and Inter Cars
Can any of the company-specific risk be diversified away by investing in both KGHM Polska and Inter Cars 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 Inter Cars 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 Inter Cars SA, you can compare the effects of market volatilities on KGHM Polska and Inter Cars 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 Inter Cars. Check out your portfolio center. Please also check ongoing floating volatility patterns of KGHM Polska and Inter Cars.
Diversification Opportunities for KGHM Polska and Inter Cars
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between KGHM and Inter is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding KGHM Polska Miedz and Inter Cars SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inter Cars 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 Inter Cars. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inter Cars SA has no effect on the direction of KGHM Polska i.e., KGHM Polska and Inter Cars go up and down completely randomly.
Pair Corralation between KGHM Polska and Inter Cars
Assuming the 90 days trading horizon KGHM Polska is expected to generate 1.69 times less return on investment than Inter Cars. But when comparing it to its historical volatility, KGHM Polska Miedz is 1.24 times less risky than Inter Cars. It trades about 0.19 of its potential returns per unit of risk. Inter Cars SA is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 52,000 in Inter Cars SA on November 3, 2024 and sell it today you would earn a total of 6,300 from holding Inter Cars SA or generate 12.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KGHM Polska Miedz vs. Inter Cars SA
Performance |
| Timeline |
| KGHM Polska Miedz |
| Inter Cars SA |
KGHM Polska and Inter Cars Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KGHM Polska and Inter Cars
The main advantage of trading using opposite KGHM Polska and Inter Cars positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KGHM Polska position performs unexpectedly, Inter Cars 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 Inter Cars will offset losses from the drop in Inter Cars' long position.| KGHM Polska vs. Skyline Investment SA | KGHM Polska vs. Igoria Trade SA | KGHM Polska vs. Immobile | KGHM Polska vs. Movie Games SA |
| Inter Cars vs. Noble Financials SA | Inter Cars vs. BNP Paribas Bank | Inter Cars vs. Skyline Investment SA | Inter Cars vs. MCI Management 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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