Correlation Between Gobarto SA and Pepco Group

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

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

Diversification Opportunities for Gobarto SA and Pepco Group

-0.39

Correlation Coefficient

Gobarto SA  Pepco Group

Very good diversification

The 3 months correlation between Gobarto and Pepco is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Gobarto SA and Pepco Group BV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pepco Group BV and Gobarto SA 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 Gobarto SA are associated (or correlated) with Pepco Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pepco Group BV has no effect on the direction of Gobarto SA i.e., Gobarto SA and Pepco Group go up and down completely randomly.

Pair Corralation between Gobarto SA and Pepco Group

Assuming the 90 days trading horizon Gobarto SA is expected to under-perform the Pepco Group. In addition to that, Gobarto SA is 1.47 times more volatile than Pepco Group BV. It trades about -0.07 of its total potential returns per unit of risk. Pepco Group BV is currently generating about 0.03 per unit of volatility. If you would invest  1,623  in Pepco Group BV on December 2, 2024 and sell it today you would earn a total of  51.00  from holding Pepco Group BV or generate 3.14% return on investment over 90 days.

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

Gobarto SA  vs.  Pepco Group BV

Gobarto SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gobarto SA 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 April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pepco Group BV

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pepco Group BV are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Pepco Group is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Gobarto SA and Pepco Group

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

The idea behind Gobarto SA and Pepco Group BV 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.