Correlation Between KGHM Polska and Southern Copper
Can any of the company-specific risk be diversified away by investing in both KGHM Polska and Southern Copper 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 Southern Copper 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 Southern Copper, you can compare the effects of market volatilities on KGHM Polska and Southern Copper 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 Southern Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of KGHM Polska and Southern Copper.
Diversification Opportunities for KGHM Polska and Southern Copper
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between KGHM and Southern is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding KGHM Polska Miedz and Southern Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Copper 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 Southern Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Copper has no effect on the direction of KGHM Polska i.e., KGHM Polska and Southern Copper go up and down completely randomly.
Pair Corralation between KGHM Polska and Southern Copper
Assuming the 90 days trading horizon KGHM Polska is expected to generate 1.49 times less return on investment than Southern Copper. In addition to that, KGHM Polska is 1.94 times more volatile than Southern Copper. It trades about 0.15 of its total potential returns per unit of risk. Southern Copper is currently generating about 0.45 per unit of volatility. If you would invest 8,820 in Southern Copper on October 21, 2024 and sell it today you would earn a total of 634.00 from holding Southern Copper or generate 7.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
KGHM Polska Miedz vs. Southern Copper
Performance |
| Timeline |
| KGHM Polska Miedz |
| Southern Copper |
KGHM Polska and Southern Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KGHM Polska and Southern Copper
The main advantage of trading using opposite KGHM Polska and Southern Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KGHM Polska position performs unexpectedly, Southern Copper 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 Southern Copper will offset losses from the drop in Southern Copper's long position.| KGHM Polska vs. Freeport McMoRan | KGHM Polska vs. Southern Copper | KGHM Polska vs. Antofagasta plc | KGHM Polska vs. First Quantum Minerals |
| Southern Copper vs. Tencent Music Entertainment | Southern Copper vs. Gol Intelligent Airlines | Southern Copper vs. Warner Music Group | Southern Copper vs. Aegean Airlines SA |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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