Correlation Between PEPKOR and H2O Retailing
Can any of the company-specific risk be diversified away by investing in both PEPKOR and H2O Retailing 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 H2O Retailing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PEPKOR LTD and H2O Retailing, you can compare the effects of market volatilities on PEPKOR and H2O Retailing 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 H2O Retailing. Check out your portfolio center. Please also check ongoing floating volatility patterns of PEPKOR and H2O Retailing.
Diversification Opportunities for PEPKOR and H2O Retailing
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PEPKOR and H2O is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding PEPKOR LTD and H2O Retailing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on H2O Retailing 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 H2O Retailing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of H2O Retailing has no effect on the direction of PEPKOR i.e., PEPKOR and H2O Retailing go up and down completely randomly.
Pair Corralation between PEPKOR and H2O Retailing
Assuming the 90 days trading horizon PEPKOR LTD is expected to generate 5.11 times more return on investment than H2O Retailing. However, PEPKOR is 5.11 times more volatile than H2O Retailing. It trades about 0.16 of its potential returns per unit of risk. H2O Retailing is currently generating about 0.12 per unit of risk. If you would invest 72.00 in PEPKOR LTD on October 23, 2024 and sell it today you would earn a total of 61.00 from holding PEPKOR LTD or generate 84.72% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 98.33% |
Values | Daily Returns |
PEPKOR LTD vs. H2O Retailing
Performance |
Timeline |
PEPKOR LTD |
H2O Retailing |
PEPKOR and H2O Retailing Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with PEPKOR and H2O Retailing
The main advantage of trading using opposite PEPKOR and H2O Retailing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PEPKOR position performs unexpectedly, H2O Retailing 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 H2O Retailing will offset losses from the drop in H2O Retailing's long position.PEPKOR vs. FIREWEED METALS P | PEPKOR vs. Yuexiu Transport Infrastructure | PEPKOR vs. Westinghouse Air Brake | PEPKOR vs. Delta Air Lines |
H2O Retailing vs. Aeon Co | H2O Retailing vs. Dillards | H2O Retailing vs. Macys Inc | H2O Retailing vs. RYOHIN UNSPADR1 |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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