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 Copper Gold, 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
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between KGHM and Freeport is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding KGHM Polska Miedz and Freeport McMoran Copper Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freeport McMoran 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 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 Copper 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 horizon KGHM Polska Miedz is expected to generate 1.65 times more return on investment than Freeport McMoran. However, KGHM Polska is 1.65 times more volatile than Freeport McMoran Copper Gold. It trades about 0.05 of its potential returns per unit of risk. Freeport McMoran Copper Gold is currently generating about 0.02 per unit of risk. If you would invest 3,280 in KGHM Polska Miedz on September 1, 2024 and sell it today you would earn a total of 609.00 from holding KGHM Polska Miedz or generate 18.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 32.97% |
| Values | Daily Returns |
KGHM Polska Miedz vs. Freeport McMoran Copper Gold
Performance |
| Timeline |
| KGHM Polska Miedz |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Freeport McMoran Copper |
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. Bell Copper | KGHM Polska vs. Arizona Sonoran Copper | KGHM Polska vs. CopperCorp Resources | KGHM Polska vs. Dor Copper Mining |
| Freeport McMoran vs. Ero Copper Corp | Freeport McMoran vs. Amerigo Resources | Freeport McMoran vs. Hudbay Minerals | Freeport McMoran vs. Southern Copper |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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