Correlation Between CD Projekt and I3 Interactive

Can any of the company-specific risk be diversified away by investing in both CD Projekt and I3 Interactive 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 I3 Interactive 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 i3 Interactive, you can compare the effects of market volatilities on CD Projekt and I3 Interactive 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 I3 Interactive. Check out your portfolio center. Please also check ongoing floating volatility patterns of CD Projekt and I3 Interactive.

Diversification Opportunities for CD Projekt and I3 Interactive

0.0

Correlation Coefficient

CD Projekt  I3 Interactive

Pay attention - limited upside

The 3 months correlation between OTGLY and BLITF is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CD Projekt SA and i3 Interactive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on i3 Interactive 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 I3 Interactive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of i3 Interactive has no effect on the direction of CD Projekt i.e., CD Projekt and I3 Interactive go up and down completely randomly.

Pair Corralation between CD Projekt and I3 Interactive

If you would invest  1,162  in CD Projekt SA on December 28, 2024 and sell it today you would earn a total of  195.00  from holding CD Projekt SA or generate 16.78% return on investment over 90 days.

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

CD Projekt SA  vs.  i3 Interactive

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. In spite of fairly fragile essential indicators, CD Projekt showed solid returns over the last few months and may actually be approaching a breakup point.

i3 Interactive

Risk-Adjusted Performance

Very Weak

Over the last 90 days i3 Interactive has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, I3 Interactive is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CD Projekt and I3 Interactive

The main advantage of trading using opposite CD Projekt and I3 Interactive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CD Projekt position performs unexpectedly, I3 Interactive 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 I3 Interactive will offset losses from the drop in I3 Interactive's long position.

The idea behind CD Projekt SA and i3 Interactive 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.