Correlation Between GDEV and CD Projekt

Can any of the company-specific risk be diversified away by investing in both GDEV and CD Projekt 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 GDEV and CD Projekt into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GDEV Inc and CD Projekt SA, you can compare the effects of market volatilities on GDEV and CD Projekt 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 GDEV with a short position of CD Projekt. Check out your portfolio center. Please also check ongoing floating volatility patterns of GDEV and CD Projekt.

Diversification Opportunities for GDEV and CD Projekt

0.36

Correlation Coefficient

GDEV  CD Projekt

Weak diversification

The 3 months correlation between GDEV and OTGLF is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding GDEV Inc and CD Projekt SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CD Projekt SA and GDEV 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 GDEV Inc are associated (or correlated) with CD Projekt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CD Projekt SA has no effect on the direction of GDEV i.e., GDEV and CD Projekt go up and down completely randomly.

Pair Corralation between GDEV and CD Projekt

Given the investment horizon of 90 days GDEV Inc is expected to generate 2.7 times more return on investment than CD Projekt. However, GDEV is 2.7 times more volatile than CD Projekt SA. It trades about 0.05 of its potential returns per unit of risk. CD Projekt SA is currently generating about -0.13 per unit of risk. If you would invest  2,202  in GDEV Inc on September 4, 2024 and sell it today you would earn a total of  148.00  from holding GDEV Inc or generate 6.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

GDEV Inc  vs.  CD Projekt SA

GDEV Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GDEV Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting technical and fundamental indicators, GDEV showed solid returns over the last few months and may actually be approaching a breakup point.

CD Projekt SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CD Projekt SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with GDEV and CD Projekt

The main advantage of trading using opposite GDEV and CD Projekt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GDEV position performs unexpectedly, CD Projekt 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 CD Projekt will offset losses from the drop in CD Projekt's long position.

The idea behind GDEV Inc and CD Projekt SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..