Correlation Between KGHM Polska and KBC Ancora

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

Diversification Opportunities for KGHM Polska and KBC Ancora

0.67

Correlation Coefficient

KGHM Polska  KBC Ancora

Poor diversification

The 3 months correlation between KGHM and KBC is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding KGHM Polska Miedz and KBC Ancora SCA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KBC Ancora SCA 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 KBC Ancora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KBC Ancora SCA has no effect on the direction of KGHM Polska i.e., KGHM Polska and KBC Ancora go up and down completely randomly.

Pair Corralation between KGHM Polska and KBC Ancora

Assuming the 90 days trading horizon KGHM Polska is expected to generate 1.18 times less return on investment than KBC Ancora. In addition to that, KGHM Polska is 1.87 times more volatile than KBC Ancora SCA. It trades about 0.1 of its total potential returns per unit of risk. KBC Ancora SCA is currently generating about 0.21 per unit of volatility. If you would invest  5,176  in KBC Ancora SCA on April 22, 2025 and sell it today you would earn a total of  924.00  from holding KBC Ancora SCA or generate 17.85% return on investment over 90 days.

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

KGHM Polska Miedz  vs.  KBC Ancora SCA

KGHM Polska Miedz

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KGHM Polska Miedz are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical indicators, KGHM Polska reported solid returns over the last few months and may actually be approaching a breakup point.

KBC Ancora SCA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in KBC Ancora SCA are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, KBC Ancora reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KGHM Polska and KBC Ancora

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

The idea behind KGHM Polska Miedz and KBC Ancora SCA 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.