Correlation Between PEPKOR and Marks
Can any of the company-specific risk be diversified away by investing in both PEPKOR and Marks 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 Marks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PEPKOR LTD and Marks and Spencer, you can compare the effects of market volatilities on PEPKOR and Marks 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 Marks. Check out your portfolio center. Please also check ongoing floating volatility patterns of PEPKOR and Marks.
Diversification Opportunities for PEPKOR and Marks
Poor diversification
The 3 months correlation between PEPKOR and Marks is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding PEPKOR LTD and Marks and Spencer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marks and Spencer 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 Marks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marks and Spencer has no effect on the direction of PEPKOR i.e., PEPKOR and Marks go up and down completely randomly.
Pair Corralation between PEPKOR and Marks
Assuming the 90 days trading horizon PEPKOR LTD is expected to generate 1.16 times more return on investment than Marks. However, PEPKOR is 1.16 times more volatile than Marks and Spencer. It trades about 0.21 of its potential returns per unit of risk. Marks and Spencer is currently generating about 0.12 per unit of risk. If you would invest 82.00 in PEPKOR LTD on September 5, 2024 and sell it today you would earn a total of 62.00 from holding PEPKOR LTD or generate 75.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.22% |
| Values | Daily Returns |
PEPKOR LTD vs. Marks and Spencer
Performance |
| Timeline |
| PEPKOR LTD |
| Marks and Spencer |
PEPKOR and Marks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PEPKOR and Marks
The main advantage of trading using opposite PEPKOR and Marks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PEPKOR position performs unexpectedly, Marks 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 Marks will offset losses from the drop in Marks' long position.| PEPKOR vs. PT Indofood Sukses | PEPKOR vs. NTG Nordic Transport | PEPKOR vs. Dairy Farm International | PEPKOR vs. BII Railway Transportation |
| Marks vs. CarsalesCom | Marks vs. MAVEN WIRELESS SWEDEN | Marks vs. Entravision Communications | Marks vs. TRADEGATE |
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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