Correlation Between Kool2play and Pepco Group
Can any of the company-specific risk be diversified away by investing in both Kool2play 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 Kool2play and Pepco Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kool2play SA and Pepco Group BV, you can compare the effects of market volatilities on Kool2play 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 Kool2play with a short position of Pepco Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kool2play and Pepco Group.
Diversification Opportunities for Kool2play and Pepco Group
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kool2play and Pepco is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Kool2play SA 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 Kool2play 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 Kool2play SA 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 Kool2play i.e., Kool2play and Pepco Group go up and down completely randomly.
Pair Corralation between Kool2play and Pepco Group
Assuming the 90 days trading horizon Kool2play SA is expected to under-perform the Pepco Group. In addition to that, Kool2play is 2.36 times more volatile than Pepco Group BV. It trades about -0.03 of its total potential returns per unit of risk. Pepco Group BV is currently generating about -0.06 per unit of volatility. If you would invest 3,384 in Pepco Group BV on August 26, 2024 and sell it today you would lose (1,795) from holding Pepco Group BV or give up 53.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 91.24% |
| Values | Daily Returns |
Kool2play SA vs. Pepco Group BV
Performance |
| Timeline |
| Kool2play SA |
| Pepco Group BV |
Kool2play and Pepco Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kool2play and Pepco Group
The main advantage of trading using opposite Kool2play and Pepco Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kool2play 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.| Kool2play vs. Clean Carbon Energy | Kool2play vs. ADX | Kool2play vs. Agroliga Group PLC | Kool2play vs. Vee SA |
| Pepco Group vs. X Trade Brokers | Pepco Group vs. PMPG Polskie Media | Pepco Group vs. Kool2play SA | Pepco Group vs. Movie Games SA |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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