Correlation Between PCF Group and Erbud SA
Can any of the company-specific risk be diversified away by investing in both PCF Group and Erbud SA 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 PCF Group and Erbud SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PCF Group SA and Erbud SA, you can compare the effects of market volatilities on PCF Group and Erbud SA 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 PCF Group with a short position of Erbud SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of PCF Group and Erbud SA.
Diversification Opportunities for PCF Group and Erbud SA
Very weak diversification
The 3 months correlation between PCF and Erbud is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding PCF Group SA and Erbud SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erbud SA and PCF Group 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 PCF Group SA are associated (or correlated) with Erbud SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erbud SA has no effect on the direction of PCF Group i.e., PCF Group and Erbud SA go up and down completely randomly.
Pair Corralation between PCF Group and Erbud SA
Assuming the 90 days trading horizon PCF Group SA is expected to under-perform the Erbud SA. In addition to that, PCF Group is 2.41 times more volatile than Erbud SA. It trades about -0.15 of its total potential returns per unit of risk. Erbud SA is currently generating about 0.06 per unit of volatility. If you would invest 3,210 in Erbud SA on September 3, 2024 and sell it today you would earn a total of 70.00 from holding Erbud SA or generate 2.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PCF Group SA vs. Erbud SA
Performance |
| Timeline |
| PCF Group SA |
| Erbud SA |
PCF Group and Erbud SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PCF Group and Erbud SA
The main advantage of trading using opposite PCF Group and Erbud SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PCF Group position performs unexpectedly, Erbud SA 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 Erbud SA will offset losses from the drop in Erbud SA's long position.| PCF Group vs. M Food SA | PCF Group vs. Skyline Investment SA | PCF Group vs. Carlson Investments SA | PCF Group vs. Mlk Foods Public |
| Erbud SA vs. Enter Air SA | Erbud SA vs. Cloud Technologies SA | Erbud SA vs. CI Games SA | Erbud SA vs. Ultimate 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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