Correlation Between PDG Realty and Expedia

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

Diversification Opportunities for PDG Realty and Expedia

-0.53

Correlation Coefficient

PDG Realty  Expedia

Excellent diversification

The 3 months correlation between PDG and Expedia is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding PDG Realty SA and Expedia Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Expedia 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 Expedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Expedia Group has no effect on the direction of PDG Realty i.e., PDG Realty and Expedia go up and down completely randomly.

Pair Corralation between PDG Realty and Expedia

Assuming the 90 days trading horizon PDG Realty SA is expected to generate 52.94 times more return on investment than Expedia. However, PDG Realty is 52.94 times more volatile than Expedia Group. It trades about 0.1 of its potential returns per unit of risk. Expedia Group is currently generating about 0.08 per unit of risk. If you would invest  120,000  in PDG Realty SA on September 23, 2024 and sell it today you would lose (119,999) from holding PDG Realty SA or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.0%
Values	Daily Returns

PDG Realty SA  vs.  Expedia 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.

Expedia Group

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Expedia Group are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Expedia sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PDG Realty and Expedia

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

The idea behind PDG Realty SA and Expedia 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 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.