Correlation Between CD Projekt and Konami Holdings

Can any of the company-specific risk be diversified away by investing in both CD Projekt and Konami 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 CD Projekt and Konami Holdings 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 Konami Holdings, you can compare the effects of market volatilities on CD Projekt and Konami 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 CD Projekt with a short position of Konami Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of CD Projekt and Konami Holdings.

Diversification Opportunities for CD Projekt and Konami Holdings

-0.04

Correlation Coefficient

CD Projekt  Konami Holdings

Good diversification

The 3 months correlation between OTGLF and Konami is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding CD Projekt SA and Konami Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Konami Holdings 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 Konami Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Konami Holdings has no effect on the direction of CD Projekt i.e., CD Projekt and Konami Holdings go up and down completely randomly.

Pair Corralation between CD Projekt and Konami Holdings

Assuming the 90 days horizon CD Projekt SA is expected to generate 0.97 times more return on investment than Konami Holdings. However, CD Projekt SA is 1.03 times less risky than Konami Holdings. It trades about -0.05 of its potential returns per unit of risk. Konami Holdings is currently generating about -0.16 per unit of risk. If you would invest  4,500  in CD Projekt SA on October 7, 2024 and sell it today you would lose (60.00) from holding CD Projekt SA or give up 1.33% of portfolio value over 90 days.

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

CD Projekt SA  vs.  Konami Holdings

CD Projekt SA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CD Projekt SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, CD Projekt is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Konami Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Konami Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong primary indicators, Konami Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CD Projekt and Konami Holdings

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

The idea behind CD Projekt SA and Konami Holdings 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.