Correlation Between National Beverage and KGHM Polska

Can any of the company-specific risk be diversified away by investing in both National Beverage 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 National Beverage and KGHM Polska into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between National Beverage Corp and KGHM Polska Miedz, you can compare the effects of market volatilities on National Beverage 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 National Beverage with a short position of KGHM Polska. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and KGHM Polska.

Diversification Opportunities for National Beverage and KGHM Polska

-0.75

Correlation Coefficient

National Beverage  KGHM Polska

Pay attention - limited upside

The 3 months correlation between National and KGHM is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp 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 National Beverage 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 National Beverage Corp 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 National Beverage i.e., National Beverage and KGHM Polska go up and down completely randomly.

Pair Corralation between National Beverage and KGHM Polska

Assuming the 90 days horizon National Beverage Corp is expected to generate 0.62 times more return on investment than KGHM Polska. However, National Beverage Corp is 1.6 times less risky than KGHM Polska. It trades about 0.02 of its potential returns per unit of risk. KGHM Polska Miedz is currently generating about -0.16 per unit of risk. If you would invest  4,140  in National Beverage Corp on September 30, 2024 and sell it today you would earn a total of  40.00  from holding National Beverage Corp or generate 0.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

National Beverage Corp  vs.  KGHM Polska Miedz

National Beverage Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in National Beverage Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, National Beverage is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

KGHM Polska Miedz

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KGHM Polska Miedz has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with National Beverage and KGHM Polska

The main advantage of trading using opposite National Beverage and KGHM Polska positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage 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.

The idea behind National Beverage Corp and KGHM Polska Miedz pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.