Correlation Between Pepco Group and Amica SA
Can any of the company-specific risk be diversified away by investing in both Pepco Group and Amica 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 Pepco Group and Amica SA 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 Amica SA, you can compare the effects of market volatilities on Pepco Group and Amica 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 Pepco Group with a short position of Amica SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pepco Group and Amica SA.
Diversification Opportunities for Pepco Group and Amica SA
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Pepco and Amica is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Pepco Group BV and Amica SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amica 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 Amica SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amica SA has no effect on the direction of Pepco Group i.e., Pepco Group and Amica SA go up and down completely randomly.
Pair Corralation between Pepco Group and Amica SA
Assuming the 90 days trading horizon Pepco Group BV is expected to under-perform the Amica SA. In addition to that, Pepco Group is 1.32 times more volatile than Amica SA. It trades about -0.16 of its total potential returns per unit of risk. Amica SA is currently generating about -0.07 per unit of volatility. If you would invest 7,127 in Amica SA on September 1, 2024 and sell it today you would lose (1,077) from holding Amica SA or give up 15.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.22% |
| Values | Daily Returns |
Pepco Group BV vs. Amica SA
Performance |
| Timeline |
| Pepco Group BV |
| Amica SA |
Pepco Group and Amica SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pepco Group and Amica SA
The main advantage of trading using opposite Pepco Group and Amica SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pepco Group position performs unexpectedly, Amica 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 Amica SA will offset losses from the drop in Amica SA's long position.| Pepco Group vs. Immobile | Pepco Group vs. LSI Software SA | Pepco Group vs. Intersport Polska SA | Pepco Group vs. Mlk Foods Public |
| Amica SA vs. Echo Investment SA | Amica SA vs. Esotiq Henderson SA | Amica SA vs. Asseco Business Solutions | Amica SA vs. Detalion 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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