Correlation Between Text SA and Pepco Group
Can any of the company-specific risk be diversified away by investing in both Text SA 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 Text SA and Pepco Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Text SA and Pepco Group BV, you can compare the effects of market volatilities on Text SA 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 Text SA with a short position of Pepco Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Text SA and Pepco Group.
Diversification Opportunities for Text SA and Pepco Group
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Text and Pepco is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Text 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 Text SA 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 Text 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 Text SA i.e., Text SA and Pepco Group go up and down completely randomly.
Pair Corralation between Text SA and Pepco Group
Assuming the 90 days trading horizon Text SA is expected to generate 1.02 times more return on investment than Pepco Group. However, Text SA is 1.02 times more volatile than Pepco Group BV. It trades about -0.06 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 5,900 in Text SA on August 28, 2024 and sell it today you would lose (180.00) from holding Text SA or give up 3.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Text SA vs. Pepco Group BV
Performance |
| Timeline |
| Text SA |
| Pepco Group BV |
Text SA and Pepco Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Text SA and Pepco Group
The main advantage of trading using opposite Text SA and Pepco Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Text SA 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.| Text SA vs. Ultimate Games SA | Text SA vs. CI Games SA | Text SA vs. Live Motion Games | Text SA vs. True Games Syndicate |
| Pepco Group vs. Asseco Business Solutions | Pepco Group vs. Detalion Games SA | Pepco Group vs. Asseco South Eastern | Pepco Group vs. Movie Games 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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