Correlation Between Vercom SA and Pepco Group
Can any of the company-specific risk be diversified away by investing in both Vercom SA and Pepco Group 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 Vercom SA and Pepco Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vercom SA and Pepco Group BV, you can compare the effects of market volatilities on Vercom SA and Pepco Group 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 Vercom SA with a short position of Pepco Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vercom SA and Pepco Group.
Diversification Opportunities for Vercom SA and Pepco Group
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vercom and Pepco is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Vercom SA and Pepco Group BV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pepco Group BV and Vercom SA 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 Vercom SA are associated (or correlated) with Pepco Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pepco Group BV has no effect on the direction of Vercom SA i.e., Vercom SA and Pepco Group go up and down completely randomly.
Pair Corralation between Vercom SA and Pepco Group
Assuming the 90 days trading horizon Vercom SA is expected to under-perform the Pepco Group. But the stock apears to be less risky and, when comparing its historical volatility, Vercom SA is 1.13 times less risky than Pepco Group. The stock trades about -0.06 of its potential returns per unit of risk. The Pepco Group BV is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 1,617 in Pepco Group BV on December 30, 2024 and sell it today you would lose (75.00) from holding Pepco Group BV or give up 4.64% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Vercom SA vs. Pepco Group BV
Performance |
Timeline |
Vercom SA |
Pepco Group BV |
Vercom SA and Pepco Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Vercom SA and Pepco Group
The main advantage of trading using opposite Vercom SA and Pepco Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vercom SA position performs unexpectedly, Pepco Group 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 Pepco Group will offset losses from the drop in Pepco Group's long position.Vercom SA vs. UniCredit SpA | Vercom SA vs. ING Bank lski | Vercom SA vs. LSI Software SA | Vercom SA vs. Movie Games SA |
Pepco Group vs. Mercator Medical SA | Pepco Group vs. Varsav Game Studios | Pepco Group vs. PLAYWAY SA | Pepco Group vs. All In Games |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
CEOs Directory Screen CEOs from public companies around the world | |
Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |