Correlation Between KGHM Polska and ALEFARM BREWING

Can any of the company-specific risk be diversified away by investing in both KGHM Polska and ALEFARM BREWING 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 ALEFARM BREWING 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 ALEFARM BREWING DK 05, you can compare the effects of market volatilities on KGHM Polska and ALEFARM BREWING 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 ALEFARM BREWING. Check out your portfolio center. Please also check ongoing floating volatility patterns of KGHM Polska and ALEFARM BREWING.

Diversification Opportunities for KGHM Polska and ALEFARM BREWING

-0.56

Correlation Coefficient

KGHM Polska  ALEFARM BREWING

Excellent diversification

The 3 months correlation between KGHM and ALEFARM is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding KGHM Polska Miedz and ALEFARM BREWING DK 05 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALEFARM BREWING DK 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 ALEFARM BREWING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALEFARM BREWING DK has no effect on the direction of KGHM Polska i.e., KGHM Polska and ALEFARM BREWING go up and down completely randomly.

Pair Corralation between KGHM Polska and ALEFARM BREWING

Assuming the 90 days trading horizon KGHM Polska Miedz is expected to generate 0.51 times more return on investment than ALEFARM BREWING. However, KGHM Polska Miedz is 1.96 times less risky than ALEFARM BREWING. It trades about 0.06 of its potential returns per unit of risk. ALEFARM BREWING DK 05 is currently generating about 0.02 per unit of risk. If you would invest  2,830  in KGHM Polska Miedz on April 23, 2025 and sell it today you would earn a total of  227.00  from holding KGHM Polska Miedz or generate 8.02% return on investment over 90 days.

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

KGHM Polska Miedz  vs.  ALEFARM BREWING DK 05

KGHM Polska Miedz

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KGHM Polska Miedz are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical indicators, KGHM Polska may actually be approaching a critical reversion point that can send shares even higher in August 2025.

ALEFARM BREWING DK

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ALEFARM BREWING DK 05 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ALEFARM BREWING is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with KGHM Polska and ALEFARM BREWING

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

The idea behind KGHM Polska Miedz and ALEFARM BREWING DK 05 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.