Correlation Between Vercom SA and KGHM Polska
Can any of the company-specific risk be diversified away by investing in both Vercom SA 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 Vercom SA and KGHM Polska into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vercom SA and KGHM Polska Miedz, you can compare the effects of market volatilities on Vercom SA 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 Vercom SA with a short position of KGHM Polska. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vercom SA and KGHM Polska.
Diversification Opportunities for Vercom SA and KGHM Polska
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Vercom and KGHM is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Vercom 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 Vercom SA 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 Vercom 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 Vercom SA i.e., Vercom SA and KGHM Polska go up and down completely randomly.
Pair Corralation between Vercom SA and KGHM Polska
Assuming the 90 days trading horizon Vercom SA is expected to under-perform the KGHM Polska. In addition to that, Vercom SA is 1.04 times more volatile than KGHM Polska Miedz. It trades about -0.06 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 13, 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 Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Vercom SA vs. KGHM Polska Miedz
Performance |
| Timeline |
| Vercom SA |
| KGHM Polska Miedz |
Vercom SA and KGHM Polska Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vercom SA and KGHM Polska
The main advantage of trading using opposite Vercom SA and KGHM Polska positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vercom SA 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.| Vercom SA vs. Banco Santander SA | Vercom SA vs. UniCredit SpA | Vercom SA vs. CEZ as | Vercom SA vs. Polski Koncern Naftowy |
| KGHM Polska vs. Gamedust SA | KGHM Polska vs. Intersport Polska SA | KGHM Polska vs. Inter Cars SA | KGHM Polska vs. Centrum Finansowe Banku |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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