Correlation Between Pepkor Holdings and Italtile

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

By analyzing existing cross correlation between Pepkor Holdings and Italtile, you can compare the effects of market volatilities on Pepkor Holdings and Italtile 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 Italtile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pepkor Holdings and Italtile.

Diversification Opportunities for Pepkor Holdings and Italtile

0.52

Correlation Coefficient

Pepkor Holdings  Italtile

Very weak diversification

The 3 months correlation between Pepkor and Italtile is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Pepkor Holdings and Italtile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Italtile 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 Italtile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Italtile has no effect on the direction of Pepkor Holdings i.e., Pepkor Holdings and Italtile go up and down completely randomly.

Pair Corralation between Pepkor Holdings and Italtile

Assuming the 90 days trading horizon Pepkor Holdings is expected to generate 0.9 times more return on investment than Italtile. However, Pepkor Holdings is 1.11 times less risky than Italtile. It trades about 0.06 of its potential returns per unit of risk. Italtile is currently generating about 0.02 per unit of risk. If you would invest  192,088  in Pepkor Holdings on September 29, 2024 and sell it today you would earn a total of  98,012  from holding Pepkor Holdings or generate 51.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Pepkor Holdings  vs.  Italtile

Pepkor Holdings

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pepkor Holdings are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Pepkor Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

Italtile

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Italtile are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Italtile may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Pepkor Holdings and Italtile

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

The idea behind Pepkor Holdings and Italtile 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.