Correlation Between KGHM Polska and SIVERS SEMICONDUCTORS
Can any of the company-specific risk be diversified away by investing in both KGHM Polska and SIVERS SEMICONDUCTORS 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 SIVERS SEMICONDUCTORS 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 SIVERS SEMICONDUCTORS AB, you can compare the effects of market volatilities on KGHM Polska and SIVERS SEMICONDUCTORS 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 SIVERS SEMICONDUCTORS. Check out your portfolio center. Please also check ongoing floating volatility patterns of KGHM Polska and SIVERS SEMICONDUCTORS.
Diversification Opportunities for KGHM Polska and SIVERS SEMICONDUCTORS
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between KGHM and SIVERS is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding KGHM Polska Miedz and SIVERS SEMICONDUCTORS AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIVERS SEMICONDUCTORS 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 SIVERS SEMICONDUCTORS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIVERS SEMICONDUCTORS has no effect on the direction of KGHM Polska i.e., KGHM Polska and SIVERS SEMICONDUCTORS go up and down completely randomly.
Pair Corralation between KGHM Polska and SIVERS SEMICONDUCTORS
Assuming the 90 days trading horizon KGHM Polska Miedz is expected to generate 0.49 times more return on investment than SIVERS SEMICONDUCTORS. However, KGHM Polska Miedz is 2.05 times less risky than SIVERS SEMICONDUCTORS. It trades about 0.03 of its potential returns per unit of risk. SIVERS SEMICONDUCTORS AB is currently generating about -0.02 per unit of risk. If you would invest 2,358 in KGHM Polska Miedz on September 14, 2024 and sell it today you would earn a total of 703.00 from holding KGHM Polska Miedz or generate 29.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
KGHM Polska Miedz vs. SIVERS SEMICONDUCTORS AB
Performance |
| Timeline |
| KGHM Polska Miedz |
| SIVERS SEMICONDUCTORS |
KGHM Polska and SIVERS SEMICONDUCTORS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KGHM Polska and SIVERS SEMICONDUCTORS
The main advantage of trading using opposite KGHM Polska and SIVERS SEMICONDUCTORS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KGHM Polska position performs unexpectedly, SIVERS SEMICONDUCTORS 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 SIVERS SEMICONDUCTORS will offset losses from the drop in SIVERS SEMICONDUCTORS's long position.| KGHM Polska vs. MOLSON RS BEVERAGE | KGHM Polska vs. ScanSource | KGHM Polska vs. Tsingtao Brewery | KGHM Polska vs. Suntory Beverage Food |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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