Correlation Between Tower Investments and PCF Group
Can any of the company-specific risk be diversified away by investing in both Tower Investments and PCF 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 Tower Investments and PCF Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tower Investments SA and PCF Group SA, you can compare the effects of market volatilities on Tower Investments and PCF 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 Tower Investments with a short position of PCF Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tower Investments and PCF Group.
Diversification Opportunities for Tower Investments and PCF Group
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Tower and PCF is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Tower Investments SA and PCF Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PCF Group SA and Tower Investments 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 Tower Investments SA are associated (or correlated) with PCF Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PCF Group SA has no effect on the direction of Tower Investments i.e., Tower Investments and PCF Group go up and down completely randomly.
Pair Corralation between Tower Investments and PCF Group
Assuming the 90 days trading horizon Tower Investments SA is expected to generate 0.65 times more return on investment than PCF Group. However, Tower Investments SA is 1.53 times less risky than PCF Group. It trades about -0.04 of its potential returns per unit of risk. PCF Group SA is currently generating about -0.24 per unit of risk. If you would invest 278.00 in Tower Investments SA on September 1, 2024 and sell it today you would lose (12.00) from holding Tower Investments SA or give up 4.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tower Investments SA vs. PCF Group SA
Performance |
| Timeline |
| Tower Investments |
| PCF Group SA |
Tower Investments and PCF Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tower Investments and PCF Group
The main advantage of trading using opposite Tower Investments and PCF Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tower Investments position performs unexpectedly, PCF 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 PCF Group will offset losses from the drop in PCF Group's long position.| Tower Investments vs. Asseco Business Solutions | Tower Investments vs. Detalion Games SA | Tower Investments vs. Asseco South Eastern | Tower Investments vs. CFI Holding SA |
| PCF Group vs. Mercator Medical SA | PCF Group vs. PZ Cormay SA | PCF Group vs. Medicalg | PCF Group vs. Alior Bank 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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