Correlation Between KGHM Polska and Izolacja Jarocin
Can any of the company-specific risk be diversified away by investing in both KGHM Polska and Izolacja Jarocin 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 Izolacja Jarocin 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 Izolacja Jarocin SA, you can compare the effects of market volatilities on KGHM Polska and Izolacja Jarocin 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 Izolacja Jarocin. Check out your portfolio center. Please also check ongoing floating volatility patterns of KGHM Polska and Izolacja Jarocin.
Diversification Opportunities for KGHM Polska and Izolacja Jarocin
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KGHM and Izolacja is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding KGHM Polska Miedz and Izolacja Jarocin SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Izolacja Jarocin 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 Izolacja Jarocin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Izolacja Jarocin has no effect on the direction of KGHM Polska i.e., KGHM Polska and Izolacja Jarocin go up and down completely randomly.
Pair Corralation between KGHM Polska and Izolacja Jarocin
Assuming the 90 days trading horizon KGHM Polska is expected to generate 1.02 times less return on investment than Izolacja Jarocin. But when comparing it to its historical volatility, KGHM Polska Miedz is 1.21 times less risky than Izolacja Jarocin. It trades about 0.03 of its potential returns per unit of risk. Izolacja Jarocin SA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 310.00 in Izolacja Jarocin SA on August 29, 2024 and sell it today you would earn a total of 20.00 from holding Izolacja Jarocin SA or generate 6.45% 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. Izolacja Jarocin SA
Performance |
| Timeline |
| KGHM Polska Miedz |
| Izolacja Jarocin |
KGHM Polska and Izolacja Jarocin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KGHM Polska and Izolacja Jarocin
The main advantage of trading using opposite KGHM Polska and Izolacja Jarocin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KGHM Polska position performs unexpectedly, Izolacja Jarocin 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 Izolacja Jarocin will offset losses from the drop in Izolacja Jarocin'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 |
| Izolacja Jarocin vs. Banco Santander SA | Izolacja Jarocin vs. UniCredit SpA | Izolacja Jarocin vs. CEZ as | Izolacja Jarocin vs. Polski Koncern Naftowy |
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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