Correlation Between KGHM Polska and Reliance Steel
Can any of the company-specific risk be diversified away by investing in both KGHM Polska and Reliance Steel 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 Reliance Steel 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 Reliance Steel Aluminum, you can compare the effects of market volatilities on KGHM Polska and Reliance Steel 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 Reliance Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of KGHM Polska and Reliance Steel.
Diversification Opportunities for KGHM Polska and Reliance Steel
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between KGHM and Reliance is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding KGHM Polska Miedz and Reliance Steel Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reliance Steel Aluminum 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 Reliance Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reliance Steel Aluminum has no effect on the direction of KGHM Polska i.e., KGHM Polska and Reliance Steel go up and down completely randomly.
Pair Corralation between KGHM Polska and Reliance Steel
Assuming the 90 days trading horizon KGHM Polska is expected to generate 1.27 times less return on investment than Reliance Steel. In addition to that, KGHM Polska is 1.43 times more volatile than Reliance Steel Aluminum. It trades about 0.03 of its total potential returns per unit of risk. Reliance Steel Aluminum is currently generating about 0.06 per unit of volatility. If you would invest 18,494 in Reliance Steel Aluminum on September 14, 2024 and sell it today you would earn a total of 10,616 from holding Reliance Steel Aluminum or generate 57.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KGHM Polska Miedz vs. Reliance Steel Aluminum
Performance |
| Timeline |
| KGHM Polska Miedz |
| Reliance Steel Aluminum |
KGHM Polska and Reliance Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KGHM Polska and Reliance Steel
The main advantage of trading using opposite KGHM Polska and Reliance Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KGHM Polska position performs unexpectedly, Reliance Steel 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 Reliance Steel will offset losses from the drop in Reliance Steel's long position.| KGHM Polska vs. MOLSON RS BEVERAGE | KGHM Polska vs. ScanSource | KGHM Polska vs. Tsingtao Brewery | KGHM Polska vs. Suntory Beverage Food |
| Reliance Steel vs. HYATT HOTELS A | Reliance Steel vs. Host Hotels Resorts | Reliance Steel vs. Games Workshop Group | Reliance Steel vs. INTERCONT HOTELS |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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