Correlation Between PCC Rokita and CD PROJEKT

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

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

Diversification Opportunities for PCC Rokita and CD PROJEKT

0.48

Correlation Coefficient

PCC Rokita  CD PROJEKT

Very weak diversification

The 3 months correlation between PCC and CDR is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding PCC Rokita 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 PCC Rokita 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 PCC Rokita 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 PCC Rokita i.e., PCC Rokita and CD PROJEKT go up and down completely randomly.

Pair Corralation between PCC Rokita and CD PROJEKT

Assuming the 90 days trading horizon PCC Rokita SA is expected to under-perform the CD PROJEKT. But the stock apears to be less risky and, when comparing its historical volatility, PCC Rokita SA is 1.84 times less risky than CD PROJEKT. The stock trades about -0.22 of its potential returns per unit of risk. The CD PROJEKT SA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  17,735  in CD PROJEKT SA on September 4, 2024 and sell it today you would earn a total of  210.00  from holding CD PROJEKT SA or generate 1.18% return on investment over 90 days.

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

PCC Rokita SA  vs.  CD PROJEKT SA

PCC Rokita SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

CD PROJEKT SA

Risk-Adjusted Performance

1 of 100

Very 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. Even with relatively invariable basic indicators, CD PROJEKT 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 PCC Rokita and CD PROJEKT

The main advantage of trading using opposite PCC Rokita and CD PROJEKT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PCC Rokita 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 PCC Rokita 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 Commodity Directory module to find actively traded commodities issued by global exchanges.