Correlation Between CI Games and CD PROJEKT

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

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

Diversification Opportunities for CI Games and CD PROJEKT

0.28

Correlation Coefficient

CI Games  CD PROJEKT

Modest diversification

The 3 months correlation between CIG and CDR is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding CI Games SA 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 CI Games 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 CI Games SA 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 CI Games i.e., CI Games and CD PROJEKT go up and down completely randomly.

Pair Corralation between CI Games and CD PROJEKT

Assuming the 90 days trading horizon CI Games SA is expected to under-perform the CD PROJEKT. But the stock apears to be less risky and, when comparing its historical volatility, CI Games SA is 1.03 times less risky than CD PROJEKT. The stock trades about -0.08 of its potential returns per unit of risk. The CD PROJEKT SA is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  18,140  in CD PROJEKT SA on September 2, 2024 and sell it today you would lose (1,420) from holding CD PROJEKT SA or give up 7.83% of portfolio value over 90 days.

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

CI Games SA  vs.  CD PROJEKT SA

CI Games SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CI Games SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

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. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with CI Games and CD PROJEKT

The main advantage of trading using opposite CI Games and CD PROJEKT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CI Games 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 CI Games SA 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.