Correlation Between Pepco Group and PCF Group
Can any of the company-specific risk be diversified away by investing in both Pepco Group and PCF Group 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 PCF Group 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 PCF Group SA, you can compare the effects of market volatilities on Pepco Group and PCF Group 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 PCF Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pepco Group and PCF Group.
Diversification Opportunities for Pepco Group and PCF Group
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Pepco and PCF is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Pepco Group BV and PCF Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PCF Group 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 PCF Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PCF Group SA has no effect on the direction of Pepco Group i.e., Pepco Group and PCF Group go up and down completely randomly.
Pair Corralation between Pepco Group and PCF Group
Assuming the 90 days trading horizon Pepco Group BV is expected to generate 0.65 times more return on investment than PCF Group. However, Pepco Group BV is 1.53 times less risky than PCF Group. It trades about -0.15 of its potential returns per unit of risk. PCF Group SA is currently generating about -0.29 per unit of risk. If you would invest 1,748 in Pepco Group BV on August 28, 2024 and sell it today you would lose (121.00) from holding Pepco Group BV or give up 6.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pepco Group BV vs. PCF Group SA
Performance |
| Timeline |
| Pepco Group BV |
| PCF Group SA |
Pepco Group and PCF Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pepco Group and PCF Group
The main advantage of trading using opposite Pepco Group and PCF Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pepco Group position performs unexpectedly, PCF Group 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 PCF Group will offset losses from the drop in PCF Group's long position.| Pepco Group vs. Asseco Business Solutions | Pepco Group vs. Detalion Games SA | Pepco Group vs. Asseco South Eastern | Pepco Group vs. Movie Games SA |
| PCF Group vs. PLAYWAY SA | PCF Group vs. Movie Games SA | PCF Group vs. Santander Bank Polska | PCF Group vs. Bank Millennium 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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