Correlation Between KGHM Polska and AURUBIS AG

Can any of the company-specific risk be diversified away by investing in both KGHM Polska and AURUBIS AG 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 AURUBIS AG 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 AURUBIS AG UNSPADR, you can compare the effects of market volatilities on KGHM Polska and AURUBIS AG 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 AURUBIS AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of KGHM Polska and AURUBIS AG.

Diversification Opportunities for KGHM Polska and AURUBIS AG

-0.82

Correlation Coefficient

KGHM Polska  AURUBIS AG

Pay attention - limited upside

The 3 months correlation between KGHM and AURUBIS is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding KGHM Polska Miedz and AURUBIS AG UNSPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AURUBIS AG UNSPADR 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 AURUBIS AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AURUBIS AG UNSPADR has no effect on the direction of KGHM Polska i.e., KGHM Polska and AURUBIS AG go up and down completely randomly.

Pair Corralation between KGHM Polska and AURUBIS AG

Assuming the 90 days trading horizon KGHM Polska Miedz is expected to under-perform the AURUBIS AG. But the stock apears to be less risky and, when comparing its historical volatility, KGHM Polska Miedz is 1.16 times less risky than AURUBIS AG. The stock trades about -0.15 of its potential returns per unit of risk. The AURUBIS AG UNSPADR is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  3,660  in AURUBIS AG UNSPADR on September 24, 2024 and sell it today you would earn a total of  80.00  from holding AURUBIS AG UNSPADR or generate 2.19% return on investment over 90 days.

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

KGHM Polska Miedz  vs.  AURUBIS AG UNSPADR

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.

AURUBIS AG UNSPADR

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AURUBIS AG UNSPADR are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, AURUBIS AG reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KGHM Polska and AURUBIS AG

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

The idea behind KGHM Polska Miedz and AURUBIS AG UNSPADR 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.