Correlation Between Pepco Group and 3R Games
Can any of the company-specific risk be diversified away by investing in both Pepco Group and 3R Games 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 Pepco Group and 3R Games into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pepco Group BV and 3R Games SA, you can compare the effects of market volatilities on Pepco Group and 3R Games 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 Pepco Group with a short position of 3R Games. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pepco Group and 3R Games.
Diversification Opportunities for Pepco Group and 3R Games
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Pepco and 3RG is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Pepco Group BV and 3R Games SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 3R Games SA and Pepco 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 Pepco Group BV are associated (or correlated) with 3R Games. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 3R Games SA has no effect on the direction of Pepco Group i.e., Pepco Group and 3R Games go up and down completely randomly.
Pair Corralation between Pepco Group and 3R Games
Assuming the 90 days trading horizon Pepco Group is expected to generate 12.26 times less return on investment than 3R Games. But when comparing it to its historical volatility, Pepco Group BV is 2.47 times less risky than 3R Games. It trades about 0.04 of its potential returns per unit of risk. 3R Games SA is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 28.00 in 3R Games SA on September 12, 2024 and sell it today you would earn a total of 10.00 from holding 3R Games SA or generate 35.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Pepco Group BV vs. 3R Games SA
Performance |
| Timeline |
| Pepco Group BV |
| 3R Games SA |
Pepco Group and 3R Games Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pepco Group and 3R Games
The main advantage of trading using opposite Pepco Group and 3R Games positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pepco Group position performs unexpectedly, 3R Games 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 3R Games will offset losses from the drop in 3R Games' long position.| Pepco Group vs. Quantum Software SA | Pepco Group vs. Tower Investments SA | Pepco Group vs. Immobile | Pepco Group vs. Live Motion Games |
| 3R Games vs. Allegroeu SA | 3R Games vs. Asseco Business Solutions | 3R Games vs. Detalion Games SA | 3R Games vs. Asseco South Eastern |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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