Correlation Between CD Projekt and Capcom Co
Can any of the company-specific risk be diversified away by investing in both CD Projekt and Capcom Co 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 CD Projekt and Capcom Co into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CD Projekt SA and Capcom Co, you can compare the effects of market volatilities on CD Projekt and Capcom Co 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 CD Projekt with a short position of Capcom Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of CD Projekt and Capcom Co.
Diversification Opportunities for CD Projekt and Capcom Co
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between OTGLY and Capcom is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding CD Projekt SA and Capcom Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capcom Co and CD Projekt 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 CD Projekt SA are associated (or correlated) with Capcom Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capcom Co has no effect on the direction of CD Projekt i.e., CD Projekt and Capcom Co go up and down completely randomly.
Pair Corralation between CD Projekt and Capcom Co
Assuming the 90 days horizon CD Projekt is expected to generate 12.87 times less return on investment than Capcom Co. But when comparing it to its historical volatility, CD Projekt SA is 8.32 times less risky than Capcom Co. It trades about 0.05 of its potential returns per unit of risk. Capcom Co is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 3,125 in Capcom Co on November 2, 2024 and sell it today you would lose (1,015) from holding Capcom Co or give up 32.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 67.41% |
| Values | Daily Returns |
CD Projekt SA vs. Capcom Co
Performance |
| Timeline |
| CD Projekt SA |
| Capcom Co |
CD Projekt and Capcom Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CD Projekt and Capcom Co
The main advantage of trading using opposite CD Projekt and Capcom Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CD Projekt position performs unexpectedly, Capcom Co 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 Capcom Co will offset losses from the drop in Capcom Co's long position.| CD Projekt vs. Square Enix Holdings | CD Projekt vs. Capcom Co | CD Projekt vs. Sega Sammy Holdings | CD Projekt vs. Square Enix Holdings |
| Capcom Co vs. Square Enix Holdings | Capcom Co vs. CD Projekt SA | Capcom Co vs. Sega Sammy Holdings | Capcom Co 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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