Correlation Between KGHM Polska and ASML Holding

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

Diversification Opportunities for KGHM Polska and ASML Holding

0.38

Correlation Coefficient

KGHM Polska  ASML Holding

Weak diversification

The 3 months correlation between KGHM and ASML is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding KGHM Polska Miedz and ASML Holding NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASML Holding NV 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 ASML Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASML Holding NV has no effect on the direction of KGHM Polska i.e., KGHM Polska and ASML Holding go up and down completely randomly.

Pair Corralation between KGHM Polska and ASML Holding

Assuming the 90 days trading horizon KGHM Polska Miedz is expected to generate 1.11 times more return on investment than ASML Holding. However, KGHM Polska is 1.11 times more volatile than ASML Holding NV. It trades about 0.06 of its potential returns per unit of risk. ASML Holding NV is currently generating about 0.03 per unit of risk. If you would invest  2,914  in KGHM Polska Miedz on April 24, 2025 and sell it today you would earn a total of  212.00  from holding KGHM Polska Miedz or generate 7.28% 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.  ASML Holding NV

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 uncertain technical indicators, KGHM Polska may actually be approaching a critical reversion point that can send shares even higher in August 2025.

ASML Holding NV

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ASML Holding NV are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, ASML Holding is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with KGHM Polska and ASML Holding

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

The idea behind KGHM Polska Miedz and ASML Holding NV 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.