Correlation Between KGHM Polska and Antofagasta Plc
Can any of the company-specific risk be diversified away by investing in both KGHM Polska and Antofagasta Plc 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 Antofagasta Plc 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 Antofagasta plc, you can compare the effects of market volatilities on KGHM Polska and Antofagasta Plc 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 Antofagasta Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of KGHM Polska and Antofagasta Plc.
Diversification Opportunities for KGHM Polska and Antofagasta Plc
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between KGHM and Antofagasta is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding KGHM Polska Miedz and Antofagasta plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Antofagasta plc 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 Antofagasta Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Antofagasta plc has no effect on the direction of KGHM Polska i.e., KGHM Polska and Antofagasta Plc go up and down completely randomly.
Pair Corralation between KGHM Polska and Antofagasta Plc
Assuming the 90 days trading horizon KGHM Polska is expected to generate 1.13 times less return on investment than Antofagasta Plc. But when comparing it to its historical volatility, KGHM Polska Miedz is 1.11 times less risky than Antofagasta Plc. It trades about 0.17 of its potential returns per unit of risk. Antofagasta plc is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,956 in Antofagasta plc on October 20, 2024 and sell it today you would earn a total of 112.00 from holding Antofagasta plc or generate 5.73% 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. Antofagasta plc
Performance |
| Timeline |
| KGHM Polska Miedz |
| Antofagasta plc |
KGHM Polska and Antofagasta Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KGHM Polska and Antofagasta Plc
The main advantage of trading using opposite KGHM Polska and Antofagasta Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KGHM Polska position performs unexpectedly, Antofagasta Plc 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 Antofagasta Plc will offset losses from the drop in Antofagasta Plc's long position.| KGHM Polska vs. Freeport McMoRan | KGHM Polska vs. Southern Copper | KGHM Polska vs. Antofagasta plc | KGHM Polska vs. First Quantum Minerals |
| Antofagasta Plc vs. Freeport McMoRan | Antofagasta Plc vs. Southern Copper | Antofagasta Plc vs. First Quantum Minerals | Antofagasta Plc vs. KGHM Polska Miedz |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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