Correlation Between KGHM Polska and MACOM Technology
Can any of the company-specific risk be diversified away by investing in both KGHM Polska and MACOM Technology 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 MACOM Technology 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 MACOM Technology Solutions, you can compare the effects of market volatilities on KGHM Polska and MACOM Technology 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 MACOM Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of KGHM Polska and MACOM Technology.
Diversification Opportunities for KGHM Polska and MACOM Technology
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between KGHM and MACOM is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding KGHM Polska Miedz and MACOM Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MACOM Technology Sol 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 MACOM Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MACOM Technology Sol has no effect on the direction of KGHM Polska i.e., KGHM Polska and MACOM Technology go up and down completely randomly.
Pair Corralation between KGHM Polska and MACOM Technology
Assuming the 90 days trading horizon KGHM Polska is expected to generate 1.48 times less return on investment than MACOM Technology. But when comparing it to its historical volatility, KGHM Polska Miedz is 1.2 times less risky than MACOM Technology. It trades about 0.23 of its potential returns per unit of risk. MACOM Technology Solutions is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 12,900 in MACOM Technology Solutions on October 24, 2024 and sell it today you would earn a total of 1,300 from holding MACOM Technology Solutions or generate 10.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
KGHM Polska Miedz vs. MACOM Technology Solutions
Performance |
| Timeline |
| KGHM Polska Miedz |
| MACOM Technology Sol |
KGHM Polska and MACOM Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KGHM Polska and MACOM Technology
The main advantage of trading using opposite KGHM Polska and MACOM Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KGHM Polska position performs unexpectedly, MACOM Technology 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 MACOM Technology will offset losses from the drop in MACOM Technology's long position.| KGHM Polska vs. PennyMac Mortgage Investment | KGHM Polska vs. Japan Asia Investment | KGHM Polska vs. SLR Investment Corp | KGHM Polska vs. Tower One Wireless |
| MACOM Technology vs. Southwest Airlines Co | MACOM Technology vs. China Eastern Airlines | MACOM Technology vs. Aegean Airlines SA | MACOM Technology vs. United Airlines Holdings |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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