Correlation Between PEPKOR and Pick N
Can any of the company-specific risk be diversified away by investing in both PEPKOR and Pick N 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 Pick N into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PEPKOR LTD and Pick n Pay, you can compare the effects of market volatilities on PEPKOR and Pick N 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 Pick N. Check out your portfolio center. Please also check ongoing floating volatility patterns of PEPKOR and Pick N.
Diversification Opportunities for PEPKOR and Pick N
Very poor diversification
The 3 months correlation between PEPKOR and Pick is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding PEPKOR LTD and Pick n Pay in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pick n Pay 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 Pick N. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pick n Pay has no effect on the direction of PEPKOR i.e., PEPKOR and Pick N go up and down completely randomly.
Pair Corralation between PEPKOR and Pick N
Assuming the 90 days trading horizon PEPKOR LTD is expected to generate 0.55 times more return on investment than Pick N. However, PEPKOR LTD is 1.83 times less risky than Pick N. It trades about 0.2 of its potential returns per unit of risk. Pick n Pay is currently generating about 0.08 per unit of risk. If you would invest 79.00 in PEPKOR LTD on September 3, 2024 and sell it today you would earn a total of 54.00 from holding PEPKOR LTD or generate 68.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.22% |
| Values | Daily Returns |
PEPKOR LTD vs. Pick n Pay
Performance |
| Timeline |
| PEPKOR LTD |
| Pick n Pay |
PEPKOR and Pick N Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PEPKOR and Pick N
The main advantage of trading using opposite PEPKOR and Pick N positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PEPKOR position performs unexpectedly, Pick N 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 Pick N will offset losses from the drop in Pick N's long position.| PEPKOR vs. RYOHIN UNSPADR1 | PEPKOR vs. Superior Plus Corp | PEPKOR vs. NMI Holdings | PEPKOR vs. Origin Agritech |
| Pick N vs. AIR PRODCHEMICALS | Pick N vs. ELECTRONIC ARTS | Pick N vs. Meiko Electronics Co | Pick N vs. Methode Electronics |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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