Correlation Between KGHM Polska and Freeport McMoRan
Can any of the company-specific risk be diversified away by investing in both KGHM Polska and Freeport McMoRan 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 Freeport McMoRan 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 Freeport McMoRan, you can compare the effects of market volatilities on KGHM Polska and Freeport McMoRan 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 Freeport McMoRan. Check out your portfolio center. Please also check ongoing floating volatility patterns of KGHM Polska and Freeport McMoRan.
Diversification Opportunities for KGHM Polska and Freeport McMoRan
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KGHM and Freeport is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding KGHM Polska Miedz and Freeport McMoRan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freeport McMoRan 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 Freeport McMoRan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freeport McMoRan has no effect on the direction of KGHM Polska i.e., KGHM Polska and Freeport McMoRan go up and down completely randomly.
Pair Corralation between KGHM Polska and Freeport McMoRan
Assuming the 90 days trading horizon KGHM Polska Miedz is expected to generate 1.47 times more return on investment than Freeport McMoRan. However, KGHM Polska is 1.47 times more volatile than Freeport McMoRan. It trades about -0.02 of its potential returns per unit of risk. Freeport McMoRan is currently generating about -0.06 per unit of risk. If you would invest 3,080 in KGHM Polska Miedz on September 13, 2024 and sell it today you would lose (49.00) from holding KGHM Polska Miedz or give up 1.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KGHM Polska Miedz vs. Freeport McMoRan
Performance |
| Timeline |
| KGHM Polska Miedz |
| Freeport McMoRan |
KGHM Polska and Freeport McMoRan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KGHM Polska and Freeport McMoRan
The main advantage of trading using opposite KGHM Polska and Freeport McMoRan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KGHM Polska position performs unexpectedly, Freeport McMoRan 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 Freeport McMoRan will offset losses from the drop in Freeport McMoRan's long position.| KGHM Polska vs. Southern Copper | KGHM Polska vs. Sandfire Resources Limited | KGHM Polska vs. Superior Plus Corp | KGHM Polska vs. NMI Holdings |
| Freeport McMoRan vs. Southern Copper | Freeport McMoRan vs. Sandfire Resources Limited | Freeport McMoRan vs. Superior Plus Corp | Freeport McMoRan vs. NMI 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Commodity Directory Find actively traded commodities issued by global exchanges |