Correlation Between M Food and KGHM Polska
Can any of the company-specific risk be diversified away by investing in both M Food and KGHM Polska 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 M Food and KGHM Polska into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between M Food SA and KGHM Polska Miedz, you can compare the effects of market volatilities on M Food and KGHM Polska 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 M Food with a short position of KGHM Polska. Check out your portfolio center. Please also check ongoing floating volatility patterns of M Food and KGHM Polska.
Diversification Opportunities for M Food and KGHM Polska
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between MFD and KGHM is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding M Food SA and KGHM Polska Miedz in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KGHM Polska Miedz and M Food 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 M Food SA are associated (or correlated) with KGHM Polska. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KGHM Polska Miedz has no effect on the direction of M Food i.e., M Food and KGHM Polska go up and down completely randomly.
Pair Corralation between M Food and KGHM Polska
Assuming the 90 days trading horizon M Food SA is expected to under-perform the KGHM Polska. In addition to that, M Food is 2.82 times more volatile than KGHM Polska Miedz. It trades about -0.43 of its total potential returns per unit of risk. KGHM Polska Miedz is currently generating about -0.05 per unit of volatility. If you would invest 13,315 in KGHM Polska Miedz on September 12, 2024 and sell it today you would lose (260.00) from holding KGHM Polska Miedz or give up 1.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 50.0% |
| Values | Daily Returns |
M Food SA vs. KGHM Polska Miedz
Performance |
| Timeline |
| M Food SA |
| KGHM Polska Miedz |
M Food and KGHM Polska Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with M Food and KGHM Polska
The main advantage of trading using opposite M Food and KGHM Polska positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if M Food position performs unexpectedly, KGHM Polska 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 KGHM Polska will offset losses from the drop in KGHM Polska's long position.| M Food vs. Asseco Business Solutions | M Food vs. Detalion Games SA | M Food vs. Asseco South Eastern | M Food vs. HM Inwest SA |
| KGHM Polska vs. Asseco Business Solutions | KGHM Polska vs. Detalion Games SA | KGHM Polska vs. Asseco South Eastern | KGHM Polska vs. HM Inwest 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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