Correlation Between Pyramid Games and Pepco Group

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Can any of the company-specific risk be diversified away by investing in both Pyramid Games 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 Pyramid Games and Pepco Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pyramid Games SA and Pepco Group BV, you can compare the effects of market volatilities on Pyramid Games 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 Pyramid Games with a short position of Pepco Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pyramid Games and Pepco Group.

Diversification Opportunities for Pyramid Games and Pepco Group

0.41
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Pyramid and Pepco is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Pyramid Games 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 Pyramid 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 Pyramid Games 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 Pyramid Games i.e., Pyramid Games and Pepco Group go up and down completely randomly.

Pair Corralation between Pyramid Games and Pepco Group

Assuming the 90 days trading horizon Pyramid Games SA is expected to under-perform the Pepco Group. In addition to that, Pyramid Games is 1.07 times more volatile than Pepco Group BV. It trades about -0.35 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  1,716  in Pepco Group BV on October 11, 2024 and sell it today you would lose (67.00) from holding Pepco Group BV or give up 3.9% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy89.19%
ValuesDaily Returns

Pyramid Games SA  vs.  Pepco Group BV

 Performance 
       Timeline  
Pyramid Games SA 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Pyramid Games 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 February 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

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Pepco Group BV 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 February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pyramid Games and Pepco Group Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Pyramid Games and Pepco Group

The main advantage of trading using opposite Pyramid Games and Pepco Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pyramid Games 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 Pyramid Games 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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