Correlation Between Nintendo and CD Projekt
Can any of the company-specific risk be diversified away by investing in both Nintendo 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 Nintendo and CD Projekt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nintendo Co and CD Projekt SA, you can compare the effects of market volatilities on Nintendo 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 Nintendo with a short position of CD Projekt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nintendo and CD Projekt.
Diversification Opportunities for Nintendo and CD Projekt
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nintendo and OTGLY is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Nintendo Co 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 Nintendo 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 Nintendo Co 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 Nintendo i.e., Nintendo and CD Projekt go up and down completely randomly.
Pair Corralation between Nintendo and CD Projekt
Assuming the 90 days horizon Nintendo is expected to generate 1.2 times less return on investment than CD Projekt. But when comparing it to its historical volatility, Nintendo Co is 1.18 times less risky than CD Projekt. It trades about 0.04 of its potential returns per unit of risk. CD Projekt SA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 736.00 in CD Projekt SA on August 28, 2024 and sell it today you would earn a total of 265.00 from holding CD Projekt SA or generate 36.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Nintendo Co vs. CD Projekt SA
Performance |
| Timeline |
| Nintendo |
| CD Projekt SA |
Nintendo and CD Projekt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nintendo and CD Projekt
The main advantage of trading using opposite Nintendo and CD Projekt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nintendo 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.| Nintendo vs. GDEV Inc | Nintendo vs. Doubledown Interactive Co | Nintendo vs. Playstudios | Nintendo vs. SohuCom |
| CD Projekt vs. Square Enix Holdings | CD Projekt vs. Capcom Co | CD Projekt vs. Sega Sammy Holdings | CD Projekt vs. Square Enix Holdings |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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