Correlation Between PCF Group and E Xim
Can any of the company-specific risk be diversified away by investing in both PCF Group and E Xim 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 E Xim 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 E Xim IT, you can compare the effects of market volatilities on PCF Group and E Xim 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 E Xim. Check out your portfolio center. Please also check ongoing floating volatility patterns of PCF Group and E Xim.
Diversification Opportunities for PCF Group and E Xim
Excellent diversification
The 3 months correlation between PCF and EXM is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding PCF Group SA and E Xim IT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E Xim IT 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 E Xim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E Xim IT has no effect on the direction of PCF Group i.e., PCF Group and E Xim go up and down completely randomly.
Pair Corralation between PCF Group and E Xim
Assuming the 90 days trading horizon PCF Group SA is expected to under-perform the E Xim. But the stock apears to be less risky and, when comparing its historical volatility, PCF Group SA is 5.04 times less risky than E Xim. The stock trades about -0.24 of its potential returns per unit of risk. The E Xim IT is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 12,000 in E Xim IT on August 26, 2024 and sell it today you would earn a total of 4,500 from holding E Xim IT or generate 37.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 42.06% |
| Values | Daily Returns |
PCF Group SA vs. E Xim IT
Performance |
| Timeline |
| PCF Group SA |
| E Xim IT |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
PCF Group and E Xim Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PCF Group and E Xim
The main advantage of trading using opposite PCF Group and E Xim positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PCF Group position performs unexpectedly, E Xim 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 E Xim will offset losses from the drop in E Xim's long position.| PCF Group vs. Banco Santander SA | PCF Group vs. UniCredit SpA | PCF Group vs. CEZ as | PCF Group vs. Polski Koncern Naftowy |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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