Correlation Between KGHM Polska and Ecora Resources

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

Diversification Opportunities for KGHM Polska and Ecora Resources

0.62

Correlation Coefficient

KGHM Polska  Ecora Resources

Poor diversification

The 3 months correlation between KGHM and Ecora is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding KGHM Polska Miedz and Ecora Resources PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecora Resources PLC 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 Ecora Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecora Resources PLC has no effect on the direction of KGHM Polska i.e., KGHM Polska and Ecora Resources go up and down completely randomly.

Pair Corralation between KGHM Polska and Ecora Resources

Assuming the 90 days trading horizon KGHM Polska is expected to generate 2.0 times less return on investment than Ecora Resources. In addition to that, KGHM Polska is 1.08 times more volatile than Ecora Resources PLC. It trades about 0.08 of its total potential returns per unit of risk. Ecora Resources PLC is currently generating about 0.17 per unit of volatility. If you would invest  61.00  in Ecora Resources PLC on April 23, 2025 and sell it today you would earn a total of  15.00  from holding Ecora Resources PLC or generate 24.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

KGHM Polska Miedz  vs.  Ecora Resources PLC

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 6 (%) 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.

Ecora Resources PLC

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ecora Resources PLC are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Ecora Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KGHM Polska and Ecora Resources

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

The idea behind KGHM Polska Miedz and Ecora Resources PLC 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..