Correlation Between KGHM Polska and MW Trade
Can any of the company-specific risk be diversified away by investing in both KGHM Polska and MW Trade 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 MW Trade 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 MW Trade SA, you can compare the effects of market volatilities on KGHM Polska and MW Trade 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 MW Trade. Check out your portfolio center. Please also check ongoing floating volatility patterns of KGHM Polska and MW Trade.
Diversification Opportunities for KGHM Polska and MW Trade
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KGHM and MWT is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding KGHM Polska Miedz and MW Trade SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MW Trade 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 MW Trade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MW Trade SA has no effect on the direction of KGHM Polska i.e., KGHM Polska and MW Trade go up and down completely randomly.
Pair Corralation between KGHM Polska and MW Trade
Assuming the 90 days trading horizon KGHM Polska is expected to generate 9.04 times less return on investment than MW Trade. But when comparing it to its historical volatility, KGHM Polska Miedz is 2.75 times less risky than MW Trade. It trades about 0.09 of its potential returns per unit of risk. MW Trade SA is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 294.00 in MW Trade SA on November 8, 2024 and sell it today you would earn a total of 100.00 from holding MW Trade SA or generate 34.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
KGHM Polska Miedz vs. MW Trade SA
Performance |
| Timeline |
| KGHM Polska Miedz |
| MW Trade SA |
KGHM Polska and MW Trade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KGHM Polska and MW Trade
The main advantage of trading using opposite KGHM Polska and MW Trade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KGHM Polska position performs unexpectedly, MW Trade 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 MW Trade will offset losses from the drop in MW Trade's long position.| KGHM Polska vs. Skyline Investment SA | KGHM Polska vs. mBank SA | KGHM Polska vs. Games Box SA | KGHM Polska vs. ING Bank lski |
| MW Trade vs. X Trade Brokers | MW Trade vs. UF Games SA | MW Trade vs. Gaming Factory SA | MW Trade vs. Pyramid Games 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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