Correlation Between KGHM Polska and Selena FM
Can any of the company-specific risk be diversified away by investing in both KGHM Polska and Selena FM 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 Selena FM 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 Selena FM SA, you can compare the effects of market volatilities on KGHM Polska and Selena FM 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 Selena FM. Check out your portfolio center. Please also check ongoing floating volatility patterns of KGHM Polska and Selena FM.
Diversification Opportunities for KGHM Polska and Selena FM
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between KGHM and Selena is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding KGHM Polska Miedz and Selena FM SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Selena FM 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 Selena FM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Selena FM SA has no effect on the direction of KGHM Polska i.e., KGHM Polska and Selena FM go up and down completely randomly.
Pair Corralation between KGHM Polska and Selena FM
Assuming the 90 days trading horizon KGHM Polska Miedz is expected to under-perform the Selena FM. In addition to that, KGHM Polska is 1.08 times more volatile than Selena FM SA. It trades about -0.05 of its total potential returns per unit of risk. Selena FM SA is currently generating about -0.05 per unit of volatility. If you would invest 3,578 in Selena FM SA on September 1, 2024 and sell it today you would lose (538.00) from holding Selena FM SA or give up 15.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.22% |
| Values | Daily Returns |
KGHM Polska Miedz vs. Selena FM SA
Performance |
| Timeline |
| KGHM Polska Miedz |
| Selena FM SA |
KGHM Polska and Selena FM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KGHM Polska and Selena FM
The main advantage of trading using opposite KGHM Polska and Selena FM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KGHM Polska position performs unexpectedly, Selena FM 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 Selena FM will offset losses from the drop in Selena FM'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 |
| Selena FM vs. Banco Santander SA | Selena FM vs. UniCredit SpA | Selena FM vs. CEZ as | Selena FM 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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