Correlation Between Intersport Polska and KGHM Polska

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

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

Diversification Opportunities for Intersport Polska and KGHM Polska

-0.5

Correlation Coefficient

Intersport Polska  KGHM Polska

Very good diversification

The 3 months correlation between Intersport and KGHM is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Intersport Polska 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 Intersport 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 Intersport Polska 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 Intersport Polska i.e., Intersport Polska and KGHM Polska go up and down completely randomly.

Pair Corralation between Intersport Polska and KGHM Polska

Assuming the 90 days trading horizon Intersport Polska SA is expected to generate 2.18 times more return on investment than KGHM Polska. However, Intersport Polska is 2.18 times more volatile than KGHM Polska Miedz. It trades about 0.02 of its potential returns per unit of risk. KGHM Polska Miedz is currently generating about 0.02 per unit of risk. If you would invest  80.00  in Intersport Polska SA on September 13, 2024 and sell it today you would lose (13.00) from holding Intersport Polska SA or give up 16.25% of portfolio value over 90 days.

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

Intersport Polska SA  vs.  KGHM Polska Miedz

Intersport Polska

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Intersport Polska SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Intersport Polska may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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. Even with relatively invariable basic indicators, KGHM Polska is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Intersport Polska and KGHM Polska

The main advantage of trading using opposite Intersport Polska and KGHM Polska positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intersport Polska 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 Intersport Polska SA 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.