Correlation Between KGHM Polska and Stratec SE

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

Diversification Opportunities for KGHM Polska and Stratec SE

0.66

Correlation Coefficient

KGHM Polska  Stratec SE

Poor diversification

The 3 months correlation between KGHM and Stratec is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding KGHM Polska Miedz and Stratec SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stratec SE 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 Stratec SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stratec SE has no effect on the direction of KGHM Polska i.e., KGHM Polska and Stratec SE go up and down completely randomly.

Pair Corralation between KGHM Polska and Stratec SE

Assuming the 90 days trading horizon KGHM Polska is expected to generate 2.12 times less return on investment than Stratec SE. But when comparing it to its historical volatility, KGHM Polska Miedz is 1.45 times less risky than Stratec SE. It trades about 0.1 of its potential returns per unit of risk. Stratec SE is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  2,219  in Stratec SE on April 22, 2025 and sell it today you would earn a total of  681.00  from holding Stratec SE or generate 30.69% 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.  Stratec SE

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.

Stratec SE

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Stratec SE are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Stratec SE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KGHM Polska and Stratec SE

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

The idea behind KGHM Polska Miedz and Stratec SE 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..