Correlation Between Compagnie Financire and Pepkor Holdings
Can any of the company-specific risk be diversified away by investing in both Compagnie Financire and Pepkor Holdings 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 Compagnie Financire and Pepkor Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compagnie Financire Richemont and Pepkor Holdings, you can compare the effects of market volatilities on Compagnie Financire and Pepkor Holdings 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 Compagnie Financire with a short position of Pepkor Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie Financire and Pepkor Holdings.
Diversification Opportunities for Compagnie Financire and Pepkor Holdings
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Compagnie and Pepkor is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie Financire Richemont and Pepkor Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pepkor Holdings and Compagnie Financire 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 Compagnie Financire Richemont are associated (or correlated) with Pepkor Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pepkor Holdings has no effect on the direction of Compagnie Financire i.e., Compagnie Financire and Pepkor Holdings go up and down completely randomly.
Pair Corralation between Compagnie Financire and Pepkor Holdings
Assuming the 90 days trading horizon Compagnie Financire is expected to generate 1.9 times less return on investment than Pepkor Holdings. In addition to that, Compagnie Financire is 1.37 times more volatile than Pepkor Holdings. It trades about 0.11 of its total potential returns per unit of risk. Pepkor Holdings is currently generating about 0.3 per unit of volatility. If you would invest 237,400 in Pepkor Holdings on September 24, 2024 and sell it today you would earn a total of 60,400 from holding Pepkor Holdings or generate 25.44% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Compagnie Financire Richemont vs. Pepkor Holdings
Performance |
Timeline |
Compagnie Financire |
Pepkor Holdings |
Compagnie Financire and Pepkor Holdings Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Compagnie Financire and Pepkor Holdings
The main advantage of trading using opposite Compagnie Financire and Pepkor Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie Financire position performs unexpectedly, Pepkor Holdings 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 Pepkor Holdings will offset losses from the drop in Pepkor Holdings' long position.Compagnie Financire vs. Sasol Ltd Bee | Compagnie Financire vs. Growthpoint Properties | Compagnie Financire vs. AfricaRhodium ETF | Compagnie Financire vs. CoreShares Preference Share |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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