Correlation Between KGHM Polska and Mercator Medical
Can any of the company-specific risk be diversified away by investing in both KGHM Polska and Mercator Medical 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 Mercator Medical 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 Mercator Medical SA, you can compare the effects of market volatilities on KGHM Polska and Mercator Medical 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 Mercator Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of KGHM Polska and Mercator Medical.
Diversification Opportunities for KGHM Polska and Mercator Medical
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KGHM and Mercator is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding KGHM Polska Miedz and Mercator Medical SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercator Medical 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 Mercator Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercator Medical has no effect on the direction of KGHM Polska i.e., KGHM Polska and Mercator Medical go up and down completely randomly.
Pair Corralation between KGHM Polska and Mercator Medical
Assuming the 90 days trading horizon KGHM Polska Miedz is expected to under-perform the Mercator Medical. In addition to that, KGHM Polska is 1.16 times more volatile than Mercator Medical SA. It trades about -0.28 of its total potential returns per unit of risk. Mercator Medical SA is currently generating about -0.22 per unit of volatility. If you would invest 5,280 in Mercator Medical SA on September 1, 2024 and sell it today you would lose (535.00) from holding Mercator Medical SA or give up 10.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KGHM Polska Miedz vs. Mercator Medical SA
Performance |
| Timeline |
| KGHM Polska Miedz |
| Mercator Medical |
KGHM Polska and Mercator Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KGHM Polska and Mercator Medical
The main advantage of trading using opposite KGHM Polska and Mercator Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KGHM Polska position performs unexpectedly, Mercator Medical 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 Mercator Medical will offset losses from the drop in Mercator Medical's long position.| KGHM Polska vs. GreenX Metals | KGHM Polska vs. Gamedust SA | KGHM Polska vs. Mlk Foods Public | KGHM Polska vs. Alior Bank SA |
| Mercator Medical vs. Asseco Business Solutions | Mercator Medical vs. Detalion Games SA | Mercator Medical vs. Asseco South Eastern | Mercator Medical vs. CFI Holding 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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