Correlation Between Skyline Investment and Pepco Group
Can any of the company-specific risk be diversified away by investing in both Skyline Investment and Pepco Group 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 Skyline Investment and Pepco Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Skyline Investment SA and Pepco Group BV, you can compare the effects of market volatilities on Skyline Investment and Pepco Group 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 Skyline Investment with a short position of Pepco Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skyline Investment and Pepco Group.
Diversification Opportunities for Skyline Investment and Pepco Group
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Skyline and Pepco is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Skyline Investment SA and Pepco Group BV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pepco Group BV and Skyline Investment 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 Skyline Investment SA are associated (or correlated) with Pepco Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pepco Group BV has no effect on the direction of Skyline Investment i.e., Skyline Investment and Pepco Group go up and down completely randomly.
Pair Corralation between Skyline Investment and Pepco Group
Assuming the 90 days trading horizon Skyline Investment SA is expected to generate 0.55 times more return on investment than Pepco Group. However, Skyline Investment SA is 1.83 times less risky than Pepco Group. It trades about 0.03 of its potential returns per unit of risk. Pepco Group BV is currently generating about -0.15 per unit of risk. If you would invest 156.00 in Skyline Investment SA on October 25, 2024 and sell it today you would earn a total of 1.00 from holding Skyline Investment SA or generate 0.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Skyline Investment SA vs. Pepco Group BV
Performance |
| Timeline |
| Skyline Investment |
| Pepco Group BV |
Skyline Investment and Pepco Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Skyline Investment and Pepco Group
The main advantage of trading using opposite Skyline Investment and Pepco Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skyline Investment position performs unexpectedly, Pepco Group 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 Pepco Group will offset losses from the drop in Pepco Group's long position.| Skyline Investment vs. Movie Games SA | Skyline Investment vs. M Food SA | Skyline Investment vs. UniCredit SpA | Skyline Investment vs. Gamedust SA |
| Pepco Group vs. New Tech Venture | Pepco Group vs. LSI Software SA | Pepco Group vs. SOFTWARE MANSION SPOLKA | Pepco Group vs. Marie Brizard Wine |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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