Correlation Between CD PROJEKT and LPP SA
Can any of the company-specific risk be diversified away by investing in both CD PROJEKT and LPP SA 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 CD PROJEKT and LPP SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CD PROJEKT SA and LPP SA, you can compare the effects of market volatilities on CD PROJEKT and LPP SA 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 CD PROJEKT with a short position of LPP SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of CD PROJEKT and LPP SA.
Diversification Opportunities for CD PROJEKT and LPP SA
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CDR and LPP is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding CD PROJEKT SA and LPP SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LPP SA and CD PROJEKT 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 CD PROJEKT SA are associated (or correlated) with LPP SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LPP SA has no effect on the direction of CD PROJEKT i.e., CD PROJEKT and LPP SA go up and down completely randomly.
Pair Corralation between CD PROJEKT and LPP SA
Assuming the 90 days trading horizon CD PROJEKT is expected to generate 1.52 times less return on investment than LPP SA. In addition to that, CD PROJEKT is 1.01 times more volatile than LPP SA. It trades about 0.23 of its total potential returns per unit of risk. LPP SA is currently generating about 0.36 per unit of volatility. If you would invest 1,618,000 in LPP SA on November 28, 2024 and sell it today you would earn a total of 222,000 from holding LPP SA or generate 13.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CD PROJEKT SA vs. LPP SA
Performance |
| Timeline |
| CD PROJEKT SA |
| LPP SA |
CD PROJEKT and LPP SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CD PROJEKT and LPP SA
The main advantage of trading using opposite CD PROJEKT and LPP SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CD PROJEKT position performs unexpectedly, LPP SA 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 LPP SA will offset losses from the drop in LPP SA's long position.| CD PROJEKT vs. Skyline Investment SA | CD PROJEKT vs. TEN SQUARE GAMES | CD PROJEKT vs. All In Games | CD PROJEKT vs. Ultimate Games SA |
| LPP SA vs. PMPG Polskie Media | LPP SA vs. Alior Bank SA | LPP SA vs. Examobile SA | LPP SA vs. Globe Trade Centre |
Check out your portfolio center.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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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