Correlation Between PEPKOR and Electronic Arts
Can any of the company-specific risk be diversified away by investing in both PEPKOR and Electronic Arts 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 PEPKOR and Electronic Arts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PEPKOR LTD and Electronic Arts, you can compare the effects of market volatilities on PEPKOR and Electronic Arts 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 PEPKOR with a short position of Electronic Arts. Check out your portfolio center. Please also check ongoing floating volatility patterns of PEPKOR and Electronic Arts.
Diversification Opportunities for PEPKOR and Electronic Arts
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PEPKOR and Electronic is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding PEPKOR LTD and Electronic Arts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronic Arts and PEPKOR 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 PEPKOR LTD are associated (or correlated) with Electronic Arts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electronic Arts has no effect on the direction of PEPKOR i.e., PEPKOR and Electronic Arts go up and down completely randomly.
Pair Corralation between PEPKOR and Electronic Arts
Assuming the 90 days trading horizon PEPKOR LTD is expected to generate 2.76 times more return on investment than Electronic Arts. However, PEPKOR is 2.76 times more volatile than Electronic Arts. It trades about 0.55 of its potential returns per unit of risk. Electronic Arts is currently generating about 0.09 per unit of risk. If you would invest 111.00 in PEPKOR LTD on September 14, 2024 and sell it today you would earn a total of 36.00 from holding PEPKOR LTD or generate 32.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PEPKOR LTD vs. Electronic Arts
Performance |
| Timeline |
| PEPKOR LTD |
| Electronic Arts |
PEPKOR and Electronic Arts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PEPKOR and Electronic Arts
The main advantage of trading using opposite PEPKOR and Electronic Arts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PEPKOR position performs unexpectedly, Electronic Arts 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 Electronic Arts will offset losses from the drop in Electronic Arts' long position.| PEPKOR vs. RYOHIN UNSPADR1 | PEPKOR vs. Superior Plus Corp | PEPKOR vs. SIVERS SEMICONDUCTORS AB | PEPKOR vs. NorAm Drilling AS |
| Electronic Arts vs. Apple Inc | Electronic Arts vs. Apple Inc | Electronic Arts vs. Apple Inc | Electronic Arts vs. Apple Inc |
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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