Correlation Between KGHM Polska and Enter Air
Can any of the company-specific risk be diversified away by investing in both KGHM Polska and Enter Air 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 Enter Air 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 Enter Air SA, you can compare the effects of market volatilities on KGHM Polska and Enter Air 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 Enter Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of KGHM Polska and Enter Air.
Diversification Opportunities for KGHM Polska and Enter Air
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between KGHM and Enter is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding KGHM Polska Miedz and Enter Air SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enter Air 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 Enter Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enter Air SA has no effect on the direction of KGHM Polska i.e., KGHM Polska and Enter Air go up and down completely randomly.
Pair Corralation between KGHM Polska and Enter Air
Assuming the 90 days trading horizon KGHM Polska is expected to generate 3.51 times less return on investment than Enter Air. In addition to that, KGHM Polska is 1.01 times more volatile than Enter Air SA. It trades about 0.02 of its total potential returns per unit of risk. Enter Air SA is currently generating about 0.07 per unit of volatility. If you would invest 3,090 in Enter Air SA on December 11, 2024 and sell it today you would earn a total of 2,740 from holding Enter Air SA or generate 88.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
KGHM Polska Miedz vs. Enter Air SA
Performance |
| Timeline |
| KGHM Polska Miedz |
| Enter Air SA |
KGHM Polska and Enter Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KGHM Polska and Enter Air
The main advantage of trading using opposite KGHM Polska and Enter Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KGHM Polska position performs unexpectedly, Enter Air 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 Enter Air will offset losses from the drop in Enter Air's long position.| KGHM Polska vs. MW Trade SA | ||
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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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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