Correlation Between Pepco Group and CD PROJEKT

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

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

Diversification Opportunities for Pepco Group and CD PROJEKT

-0.13

Correlation Coefficient

Pepco Group  CD PROJEKT

Good diversification

The 3 months correlation between Pepco and CDR is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Pepco Group BV 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 Pepco Group 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 Pepco Group BV 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 Pepco Group i.e., Pepco Group and CD PROJEKT go up and down completely randomly.

Pair Corralation between Pepco Group and CD PROJEKT

Assuming the 90 days trading horizon Pepco Group BV is expected to under-perform the CD PROJEKT. In addition to that, Pepco Group is 1.03 times more volatile than CD PROJEKT SA. It trades about -0.15 of its total potential returns per unit of risk. CD PROJEKT SA is currently generating about 0.08 per unit of volatility. If you would invest  17,415  in CD PROJEKT SA on September 29, 2024 and sell it today you would earn a total of  1,640  from holding CD PROJEKT SA or generate 9.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Pepco Group BV  vs.  CD PROJEKT SA

Pepco Group BV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pepco Group BV has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

CD PROJEKT SA

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CD PROJEKT SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, CD PROJEKT may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Pepco Group and CD PROJEKT

The main advantage of trading using opposite Pepco Group and CD PROJEKT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pepco Group 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 Pepco Group BV 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.