Correlation Between CD PROJEKT and TEN SQUARE

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

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

Diversification Opportunities for CD PROJEKT and TEN SQUARE

0.71

Correlation Coefficient

CD PROJEKT  TEN SQUARE

Poor diversification

The 3 months correlation between CDR and TEN is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding CD PROJEKT SA and TEN SQUARE GAMES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TEN SQUARE GAMES and CD PROJEKT 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 CD PROJEKT SA are associated (or correlated) with TEN SQUARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TEN SQUARE GAMES has no effect on the direction of CD PROJEKT i.e., CD PROJEKT and TEN SQUARE go up and down completely randomly.

Pair Corralation between CD PROJEKT and TEN SQUARE

Assuming the 90 days trading horizon CD PROJEKT is expected to generate 1.56 times less return on investment than TEN SQUARE. In addition to that, CD PROJEKT is 1.05 times more volatile than TEN SQUARE GAMES. It trades about 0.1 of its total potential returns per unit of risk. TEN SQUARE GAMES is currently generating about 0.17 per unit of volatility. If you would invest  7,200  in TEN SQUARE GAMES on December 29, 2024 and sell it today you would earn a total of  1,740  from holding TEN SQUARE GAMES or generate 24.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

CD PROJEKT SA  vs.  TEN SQUARE GAMES

CD PROJEKT SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CD PROJEKT SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, CD PROJEKT reported solid returns over the last few months and may actually be approaching a breakup point.

TEN SQUARE GAMES

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TEN SQUARE GAMES are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, TEN SQUARE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CD PROJEKT and TEN SQUARE

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

The idea behind CD PROJEKT SA and TEN SQUARE GAMES 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.