Correlation Between Centrum Finansowe and Pepco Group
Can any of the company-specific risk be diversified away by investing in both Centrum Finansowe and Pepco Group 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 Centrum Finansowe and Pepco Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Centrum Finansowe Banku and Pepco Group BV, you can compare the effects of market volatilities on Centrum Finansowe and Pepco Group 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 Centrum Finansowe with a short position of Pepco Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centrum Finansowe and Pepco Group.
Diversification Opportunities for Centrum Finansowe and Pepco Group
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Centrum and Pepco is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Centrum Finansowe Banku and Pepco Group BV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pepco Group BV and Centrum Finansowe 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 Centrum Finansowe Banku are associated (or correlated) with Pepco Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pepco Group BV has no effect on the direction of Centrum Finansowe i.e., Centrum Finansowe and Pepco Group go up and down completely randomly.
Pair Corralation between Centrum Finansowe and Pepco Group
Assuming the 90 days trading horizon Centrum Finansowe Banku is expected to generate 0.89 times more return on investment than Pepco Group. However, Centrum Finansowe Banku is 1.13 times less risky than Pepco Group. It trades about 0.04 of its potential returns per unit of risk. Pepco Group BV is currently generating about -0.05 per unit of risk. If you would invest 356.00 in Centrum Finansowe Banku on December 7, 2024 and sell it today you would earn a total of 126.00 from holding Centrum Finansowe Banku or generate 35.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.59% |
| Values | Daily Returns |
Centrum Finansowe Banku vs. Pepco Group BV
Performance |
| Timeline |
| Centrum Finansowe Banku |
| Pepco Group BV |
Centrum Finansowe and Pepco Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centrum Finansowe and Pepco Group
The main advantage of trading using opposite Centrum Finansowe and Pepco Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centrum Finansowe position performs unexpectedly, Pepco Group 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 Pepco Group will offset losses from the drop in Pepco Group's long position.| Centrum Finansowe vs. Igoria Trade SA | ||
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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