Correlation Between PDG Realty and CoStar

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

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

Diversification Opportunities for PDG Realty and CoStar

-0.1

Correlation Coefficient

PDG Realty  CoStar

Good diversification

The 3 months correlation between PDG and CoStar is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding PDG Realty SA and CoStar Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CoStar Group and PDG Realty 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 PDG Realty SA are associated (or correlated) with CoStar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CoStar Group has no effect on the direction of PDG Realty i.e., PDG Realty and CoStar go up and down completely randomly.

Pair Corralation between PDG Realty and CoStar

Assuming the 90 days trading horizon PDG Realty SA is expected to under-perform the CoStar. In addition to that, PDG Realty is 10.3 times more volatile than CoStar Group. It trades about -0.14 of its total potential returns per unit of risk. CoStar Group is currently generating about 0.06 per unit of volatility. If you would invest  422.00  in CoStar Group on September 18, 2024 and sell it today you would earn a total of  30.00  from holding CoStar Group or generate 7.11% return on investment over 90 days.

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

PDG Realty SA  vs.  CoStar Group

PDG Realty SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PDG Realty SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

CoStar Group

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CoStar Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical and fundamental indicators, CoStar may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with PDG Realty and CoStar

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

The idea behind PDG Realty SA and CoStar Group 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.