Correlation Between Pepkor Holdings and Trematon Capital
Can any of the company-specific risk be diversified away by investing in both Pepkor Holdings and Trematon Capital 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 Trematon Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pepkor Holdings and Trematon Capital Investments, you can compare the effects of market volatilities on Pepkor Holdings and Trematon Capital 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 Trematon Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pepkor Holdings and Trematon Capital.
Diversification Opportunities for Pepkor Holdings and Trematon Capital
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Pepkor and Trematon is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Pepkor Holdings and Trematon Capital Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trematon Capital Inv 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 Trematon Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trematon Capital Inv has no effect on the direction of Pepkor Holdings i.e., Pepkor Holdings and Trematon Capital go up and down completely randomly.
Pair Corralation between Pepkor Holdings and Trematon Capital
Assuming the 90 days trading horizon Pepkor Holdings is expected to generate 0.38 times more return on investment than Trematon Capital. However, Pepkor Holdings is 2.6 times less risky than Trematon Capital. It trades about 0.06 of its potential returns per unit of risk. Trematon Capital Investments is currently generating about 0.01 per unit of risk. If you would invest 190,855 in Pepkor Holdings on September 24, 2024 and sell it today you would earn a total of 106,945 from holding Pepkor Holdings or generate 56.03% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 99.8% |
Values | Daily Returns |
Pepkor Holdings vs. Trematon Capital Investments
Performance |
Timeline |
Pepkor Holdings |
Trematon Capital Inv |
Pepkor Holdings and Trematon Capital Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Pepkor Holdings and Trematon Capital
The main advantage of trading using opposite Pepkor Holdings and Trematon Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pepkor Holdings position performs unexpectedly, Trematon Capital 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 Trematon Capital will offset losses from the drop in Trematon Capital'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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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