Correlation Between MW Trade and CD PROJEKT
Can any of the company-specific risk be diversified away by investing in both MW Trade and CD PROJEKT 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 MW Trade and CD PROJEKT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MW Trade SA and CD PROJEKT SA, you can compare the effects of market volatilities on MW Trade and CD PROJEKT 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 MW Trade with a short position of CD PROJEKT. Check out your portfolio center. Please also check ongoing floating volatility patterns of MW Trade and CD PROJEKT.
Diversification Opportunities for MW Trade and CD PROJEKT
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MWT and CDR is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding MW Trade SA and CD PROJEKT SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CD PROJEKT SA and MW Trade 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 MW Trade SA are associated (or correlated) with CD PROJEKT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CD PROJEKT SA has no effect on the direction of MW Trade i.e., MW Trade and CD PROJEKT go up and down completely randomly.
Pair Corralation between MW Trade and CD PROJEKT
Assuming the 90 days trading horizon MW Trade SA is expected to under-perform the CD PROJEKT. But the stock apears to be less risky and, when comparing its historical volatility, MW Trade SA is 1.13 times less risky than CD PROJEKT. The stock trades about -0.46 of its potential returns per unit of risk. The CD PROJEKT SA is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 16,060 in CD PROJEKT SA on September 2, 2024 and sell it today you would earn a total of 660.00 from holding CD PROJEKT SA or generate 4.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MW Trade SA vs. CD PROJEKT SA
Performance |
| Timeline |
| MW Trade SA |
| CD PROJEKT SA |
MW Trade and CD PROJEKT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MW Trade and CD PROJEKT
The main advantage of trading using opposite MW Trade and CD PROJEKT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MW Trade position performs unexpectedly, CD PROJEKT 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 CD PROJEKT will offset losses from the drop in CD PROJEKT's long position.| MW Trade vs. Asseco Business Solutions | MW Trade vs. Detalion Games SA | MW Trade vs. Asseco South Eastern | MW Trade vs. CFI Holding SA |
| CD PROJEKT vs. LPP SA | CD PROJEKT vs. Stalprodukt SA | CD PROJEKT vs. mBank SA | CD PROJEKT vs. Santander Bank Polska |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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