Correlation Between Pepco Group and Text SA
Can any of the company-specific risk be diversified away by investing in both Pepco Group and Text 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 Text 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 Text SA, you can compare the effects of market volatilities on Pepco Group and Text 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 Text SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pepco Group and Text SA.
Diversification Opportunities for Pepco Group and Text SA
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Pepco and Text is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Pepco Group BV and Text SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Text 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 Text SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Text SA has no effect on the direction of Pepco Group i.e., Pepco Group and Text SA go up and down completely randomly.
Pair Corralation between Pepco Group and Text SA
Assuming the 90 days trading horizon Pepco Group BV is expected to generate 1.16 times more return on investment than Text SA. However, Pepco Group is 1.16 times more volatile than Text SA. It trades about -0.19 of its potential returns per unit of risk. Text SA is currently generating about -0.24 per unit of risk. If you would invest 1,730 in Pepco Group BV on August 25, 2024 and sell it today you would lose (141.00) from holding Pepco Group BV or give up 8.15% 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. Text SA
Performance |
| Timeline |
| Pepco Group BV |
| Text SA |
Pepco Group and Text SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pepco Group and Text SA
The main advantage of trading using opposite Pepco Group and Text SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pepco Group position performs unexpectedly, Text 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 Text SA will offset losses from the drop in Text SA'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 |
| Text SA vs. Banco Santander SA | Text SA vs. UniCredit SpA | Text SA vs. CEZ as | Text SA 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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