Correlation Between CD Projekt and Embracer Group
Can any of the company-specific risk be diversified away by investing in both CD Projekt and Embracer 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 CD Projekt and Embracer Group 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 Embracer Group AB, you can compare the effects of market volatilities on CD Projekt and Embracer 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 CD Projekt with a short position of Embracer Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of CD Projekt and Embracer Group.
Diversification Opportunities for CD Projekt and Embracer Group
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between OTGLY and Embracer is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding CD Projekt SA and Embracer Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Embracer Group AB 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 Embracer Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Embracer Group AB has no effect on the direction of CD Projekt i.e., CD Projekt and Embracer Group go up and down completely randomly.
Pair Corralation between CD Projekt and Embracer Group
Assuming the 90 days horizon CD Projekt SA is expected to generate 1.05 times more return on investment than Embracer Group. However, CD Projekt is 1.05 times more volatile than Embracer Group AB. It trades about 0.02 of its potential returns per unit of risk. Embracer Group AB is currently generating about -0.28 per unit of risk. If you would invest 995.00 in CD Projekt SA on August 31, 2024 and sell it today you would earn a total of 5.00 from holding CD Projekt SA or generate 0.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CD Projekt SA vs. Embracer Group AB
Performance |
| Timeline |
| CD Projekt SA |
| Embracer Group AB |
CD Projekt and Embracer Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CD Projekt and Embracer Group
The main advantage of trading using opposite CD Projekt and Embracer Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CD Projekt position performs unexpectedly, Embracer 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 Embracer Group will offset losses from the drop in Embracer Group'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 |
| Embracer Group vs. Square Enix Holdings | Embracer Group vs. Capcom Co | Embracer Group vs. CD Projekt SA | Embracer Group vs. Sega Sammy 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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