Correlation Between KGHM Polska and National Beverage

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

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

Diversification Opportunities for KGHM Polska and National Beverage

-0.75

Correlation Coefficient

KGHM Polska  National Beverage

Pay attention - limited upside

The 3 months correlation between KGHM and National is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding KGHM Polska Miedz and National Beverage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Beverage Corp and KGHM 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 KGHM Polska Miedz are associated (or correlated) with National Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Beverage Corp has no effect on the direction of KGHM Polska i.e., KGHM Polska and National Beverage go up and down completely randomly.

Pair Corralation between KGHM Polska and National Beverage

Assuming the 90 days trading horizon KGHM Polska Miedz is expected to under-perform the National Beverage. In addition to that, KGHM Polska is 1.59 times more volatile than National Beverage Corp. It trades about -0.16 of its total potential returns per unit of risk. National Beverage Corp is currently generating about 0.02 per unit of volatility. If you would invest  4,140  in National Beverage Corp on September 29, 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	98.41%
Values	Daily Returns

KGHM Polska Miedz  vs.  National Beverage Corp

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.

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.

Pair Trading with KGHM Polska and National Beverage

The main advantage of trading using opposite KGHM Polska and National Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KGHM Polska position performs unexpectedly, National Beverage 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 National Beverage will offset losses from the drop in National Beverage's long position.

The idea behind KGHM Polska Miedz and National Beverage Corp 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.