Correlation Between PEPKOR and Dillards

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

By analyzing existing cross correlation between PEPKOR LTD and Dillards, you can compare the effects of market volatilities on PEPKOR and Dillards 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 with a short position of Dillards. Check out your portfolio center. Please also check ongoing floating volatility patterns of PEPKOR and Dillards.

Diversification Opportunities for PEPKOR and Dillards

0.64

Correlation Coefficient

PEPKOR  Dillards

Poor diversification

The 3 months correlation between PEPKOR and Dillards is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding PEPKOR LTD and Dillards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dillards and PEPKOR 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 LTD are associated (or correlated) with Dillards. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dillards has no effect on the direction of PEPKOR i.e., PEPKOR and Dillards go up and down completely randomly.

Pair Corralation between PEPKOR and Dillards

Assuming the 90 days trading horizon PEPKOR LTD is expected to under-perform the Dillards. In addition to that, PEPKOR is 1.25 times more volatile than Dillards. It trades about -0.03 of its total potential returns per unit of risk. Dillards is currently generating about 0.16 per unit of volatility. If you would invest  39,346  in Dillards on October 10, 2024 and sell it today you would earn a total of  3,054  from holding Dillards or generate 7.76% return on investment over 90 days.

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

PEPKOR LTD  vs.  Dillards

PEPKOR LTD

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PEPKOR LTD are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PEPKOR reported solid returns over the last few months and may actually be approaching a breakup point.

Dillards

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dillards are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Dillards reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PEPKOR and Dillards

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

The idea behind PEPKOR LTD and Dillards 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.