Correlation Between Pepco Group and VOOLT SA
Can any of the company-specific risk be diversified away by investing in both Pepco Group and VOOLT 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 VOOLT 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 VOOLT SA, you can compare the effects of market volatilities on Pepco Group and VOOLT 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 VOOLT SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pepco Group and VOOLT SA.
Diversification Opportunities for Pepco Group and VOOLT SA
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Pepco and VOOLT is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Pepco Group BV and VOOLT SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VOOLT 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 VOOLT SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VOOLT SA has no effect on the direction of Pepco Group i.e., Pepco Group and VOOLT SA go up and down completely randomly.
Pair Corralation between Pepco Group and VOOLT SA
Assuming the 90 days trading horizon Pepco Group BV is expected to generate 1.3 times more return on investment than VOOLT SA. However, Pepco Group is 1.3 times more volatile than VOOLT SA. It trades about 0.11 of its potential returns per unit of risk. VOOLT SA is currently generating about 0.06 per unit of risk. If you would invest 1,574 in Pepco Group BV on November 28, 2024 and sell it today you would earn a total of 72.00 from holding Pepco Group BV or generate 4.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Pepco Group BV vs. VOOLT SA
Performance |
| Timeline |
| Pepco Group BV |
| VOOLT SA |
Pepco Group and VOOLT SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pepco Group and VOOLT SA
The main advantage of trading using opposite Pepco Group and VOOLT SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pepco Group position performs unexpectedly, VOOLT 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 VOOLT SA will offset losses from the drop in VOOLT SA's long position.| Pepco Group vs. Road Studio SA | Pepco Group vs. Examobile SA | Pepco Group vs. Cloud Technologies SA | Pepco Group vs. True Games Syndicate |
| VOOLT SA vs. Immobile | VOOLT SA vs. Examobile SA | VOOLT SA vs. GreenX Metals | VOOLT SA vs. Quantum Software 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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