Correlation Between Pepkor Holdings and Advtech
Can any of the company-specific risk be diversified away by investing in both Pepkor Holdings and Advtech 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 Pepkor Holdings and Advtech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pepkor Holdings and Advtech, you can compare the effects of market volatilities on Pepkor Holdings and Advtech 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 Pepkor Holdings with a short position of Advtech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pepkor Holdings and Advtech.
Diversification Opportunities for Pepkor Holdings and Advtech
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pepkor and Advtech is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Pepkor Holdings and Advtech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advtech and Pepkor Holdings 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 Pepkor Holdings are associated (or correlated) with Advtech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advtech has no effect on the direction of Pepkor Holdings i.e., Pepkor Holdings and Advtech go up and down completely randomly.
Pair Corralation between Pepkor Holdings and Advtech
Assuming the 90 days trading horizon Pepkor Holdings is expected to generate 1.07 times more return on investment than Advtech. However, Pepkor Holdings is 1.07 times more volatile than Advtech. It trades about 0.2 of its potential returns per unit of risk. Advtech is currently generating about 0.07 per unit of risk. If you would invest 176,500 in Pepkor Holdings on September 24, 2024 and sell it today you would earn a total of 121,300 from holding Pepkor Holdings or generate 68.73% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Pepkor Holdings vs. Advtech
Performance |
Timeline |
Pepkor Holdings |
Advtech |
Pepkor Holdings and Advtech Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Pepkor Holdings and Advtech
The main advantage of trading using opposite Pepkor Holdings and Advtech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pepkor Holdings position performs unexpectedly, Advtech 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 Advtech will offset losses from the drop in Advtech's long position.Pepkor Holdings vs. Prosus NV | Pepkor Holdings vs. Compagnie Financire Richemont | Pepkor Holdings vs. British American Tobacco | Pepkor Holdings vs. Glencore PLC |
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Check out your portfolio center.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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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