Correlation Between Pepco Group and Atlantis
Can any of the company-specific risk be diversified away by investing in both Pepco Group and Atlantis 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 Atlantis 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 Atlantis SA, you can compare the effects of market volatilities on Pepco Group and Atlantis 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 Atlantis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pepco Group and Atlantis.
Diversification Opportunities for Pepco Group and Atlantis
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Pepco and Atlantis is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Pepco Group BV and Atlantis SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlantis 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 Atlantis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlantis SA has no effect on the direction of Pepco Group i.e., Pepco Group and Atlantis go up and down completely randomly.
Pair Corralation between Pepco Group and Atlantis
Assuming the 90 days trading horizon Pepco Group BV is expected to under-perform the Atlantis. But the stock apears to be less risky and, when comparing its historical volatility, Pepco Group BV is 1.96 times less risky than Atlantis. The stock trades about -0.05 of its potential returns per unit of risk. The Atlantis SA is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 8.90 in Atlantis SA on October 9, 2024 and sell it today you would earn a total of 8.10 from holding Atlantis SA or generate 91.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pepco Group BV vs. Atlantis SA
Performance |
| Timeline |
| Pepco Group BV |
| Atlantis SA |
Pepco Group and Atlantis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pepco Group and Atlantis
The main advantage of trading using opposite Pepco Group and Atlantis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pepco Group position performs unexpectedly, Atlantis 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 Atlantis will offset losses from the drop in Atlantis' long position.| Pepco Group vs. Cloud Technologies SA | Pepco Group vs. Igoria Trade SA | Pepco Group vs. Echo Investment SA | Pepco Group vs. PZ Cormay SA |
| Atlantis vs. Banco Santander SA | Atlantis vs. UniCredit SpA | Atlantis vs. CEZ as | Atlantis 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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