Correlation Between Eternit SA and PDG Realty
Can any of the company-specific risk be diversified away by investing in both Eternit SA and PDG Realty 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 Eternit SA and PDG Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eternit SA and PDG Realty SA, you can compare the effects of market volatilities on Eternit SA and PDG Realty 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 Eternit SA with a short position of PDG Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eternit SA and PDG Realty.
Diversification Opportunities for Eternit SA and PDG Realty
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Eternit and PDG is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Eternit SA and PDG Realty SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PDG Realty SA and Eternit SA 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 Eternit SA are associated (or correlated) with PDG Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PDG Realty SA has no effect on the direction of Eternit SA i.e., Eternit SA and PDG Realty go up and down completely randomly.
Pair Corralation between Eternit SA and PDG Realty
Assuming the 90 days trading horizon Eternit SA is expected to under-perform the PDG Realty. But the stock apears to be less risky and, when comparing its historical volatility, Eternit SA is 42.83 times less risky than PDG Realty. The stock trades about -0.05 of its potential returns per unit of risk. The PDG Realty SA is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 130,000 in PDG Realty SA on August 27, 2024 and sell it today you would lose (129,999) from holding PDG Realty SA or give up 100.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eternit SA vs. PDG Realty SA
Performance |
| Timeline |
| Eternit SA |
| PDG Realty SA |
Eternit SA and PDG Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eternit SA and PDG Realty
The main advantage of trading using opposite Eternit SA and PDG Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eternit SA position performs unexpectedly, PDG Realty 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 PDG Realty will offset losses from the drop in PDG Realty's long position.| Eternit SA vs. Companhia de Gs | Eternit SA vs. Rede Energia Participaes | Eternit SA vs. CTEEP Companhia | Eternit SA vs. Rio Paranapanema Energia |
| PDG Realty vs. Baidu Inc | PDG Realty vs. Deutsche Bank Aktiengesellschaft | PDG Realty vs. HSBC Holdings plc | PDG Realty vs. The Bank of |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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