Correlation Between Pepkor Holdings and Zeder Investments

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

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

Diversification Opportunities for Pepkor Holdings and Zeder Investments

-0.1

Correlation Coefficient

Pepkor Holdings  Zeder Investments

Good diversification

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

Pair Corralation between Pepkor Holdings and Zeder Investments

Assuming the 90 days trading horizon Pepkor Holdings is expected to generate 66.42 times more return on investment than Zeder Investments. However, Pepkor Holdings is 66.42 times more volatile than Zeder Investments. It trades about 0.11 of its potential returns per unit of risk. Zeder Investments is currently generating about -0.01 per unit of risk. If you would invest  287,889  in Pepkor Holdings on December 22, 2024 and sell it today you would lose (32,389) from holding Pepkor Holdings or give up 11.25% of portfolio value over 90 days.

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

Pepkor Holdings  vs.  Zeder Investments

Pepkor Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pepkor Holdings 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, Pepkor Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

Zeder Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zeder Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Zeder Investments is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Pepkor Holdings and Zeder Investments

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

The idea behind Pepkor Holdings and Zeder Investments 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.