Correlation Between New Tech and KGHM Polska
Can any of the company-specific risk be diversified away by investing in both New Tech 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 New Tech and KGHM Polska into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Tech Venture and KGHM Polska Miedz, you can compare the effects of market volatilities on New Tech 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 New Tech with a short position of KGHM Polska. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Tech and KGHM Polska.
Diversification Opportunities for New Tech and KGHM Polska
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between New and KGHM is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding New Tech Venture 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 New Tech 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 New Tech Venture 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 New Tech i.e., New Tech and KGHM Polska go up and down completely randomly.
Pair Corralation between New Tech and KGHM Polska
Assuming the 90 days trading horizon New Tech Venture is expected to under-perform the KGHM Polska. But the stock apears to be less risky and, when comparing its historical volatility, New Tech Venture is 1.05 times less risky than KGHM Polska. The stock trades about -0.22 of its potential returns per unit of risk. The KGHM Polska Miedz is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 11,930 in KGHM Polska Miedz on November 8, 2024 and sell it today you would earn a total of 955.00 from holding KGHM Polska Miedz or generate 8.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 86.96% |
| Values | Daily Returns |
New Tech Venture vs. KGHM Polska Miedz
Performance |
| Timeline |
| New Tech Venture |
| KGHM Polska Miedz |
New Tech and KGHM Polska Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Tech and KGHM Polska
The main advantage of trading using opposite New Tech and KGHM Polska positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Tech 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.| New Tech vs. TEN SQUARE GAMES | New Tech vs. Centrum Finansowe Banku | New Tech vs. Bank Millennium SA | New Tech vs. True Games Syndicate |
| KGHM Polska vs. Skyline Investment SA | KGHM Polska vs. mBank SA | KGHM Polska vs. Games Box SA | KGHM Polska vs. ING Bank lski |
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.
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