Correlation Between Pepkor Holdings and Trellidor Holdings

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

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

Diversification Opportunities for Pepkor Holdings and Trellidor Holdings

0.1

Correlation Coefficient

Pepkor Holdings  Trellidor Holdings

Average diversification

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

Pair Corralation between Pepkor Holdings and Trellidor Holdings

Assuming the 90 days trading horizon Pepkor Holdings is expected to generate 19.0 times more return on investment than Trellidor Holdings. However, Pepkor Holdings is 19.0 times more volatile than Trellidor Holdings. It trades about 0.11 of its potential returns per unit of risk. Trellidor Holdings is currently generating about 0.07 per unit of risk. If you would invest  284,846  in Pepkor Holdings on December 25, 2024 and sell it today you would lose (22,346) from holding Pepkor Holdings or give up 7.84% of portfolio value over 90 days.

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

Pepkor Holdings  vs.  Trellidor Holdings

Pepkor Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pepkor Holdings are ranked lower than 9 (%) 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.

Trellidor Holdings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Trellidor Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Trellidor Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pepkor Holdings and Trellidor Holdings

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

The idea behind Pepkor Holdings and Trellidor Holdings 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.

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 Global Correlations module to find global opportunities by holding instruments from different markets.