Correlation Between KGHM Polska and Paragon Banking

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

Diversification Opportunities for KGHM Polska and Paragon Banking

0.27

Correlation Coefficient

KGHM Polska  Paragon Banking

Modest diversification

The 3 months correlation between KGHM and Paragon is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding KGHM Polska Miedz and Paragon Banking Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paragon Banking Group 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 Paragon Banking. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paragon Banking Group has no effect on the direction of KGHM Polska i.e., KGHM Polska and Paragon Banking go up and down completely randomly.

Pair Corralation between KGHM Polska and Paragon Banking

Assuming the 90 days trading horizon KGHM Polska is expected to generate 2.06 times less return on investment than Paragon Banking. In addition to that, KGHM Polska is 1.55 times more volatile than Paragon Banking Group. It trades about 0.06 of its total potential returns per unit of risk. Paragon Banking Group is currently generating about 0.19 per unit of volatility. If you would invest  946.00  in Paragon Banking Group on April 24, 2025 and sell it today you would earn a total of  174.00  from holding Paragon Banking Group or generate 18.39% return on investment over 90 days.

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

KGHM Polska Miedz  vs.  Paragon Banking Group

KGHM Polska Miedz

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in KGHM Polska Miedz are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical indicators, KGHM Polska may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Paragon Banking Group

Risk-Adjusted Performance

Good

Over the last 90 days Paragon Banking Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak basic indicators, Paragon Banking reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KGHM Polska and Paragon Banking

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

The idea behind KGHM Polska Miedz and Paragon Banking Group 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..