Correlation Between Square Enix and CD Projekt

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

By analyzing existing cross correlation between Square Enix Holdings and CD Projekt SA, you can compare the effects of market volatilities on Square Enix and CD Projekt 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 Square Enix with a short position of CD Projekt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Square Enix and CD Projekt.

Diversification Opportunities for Square Enix and CD Projekt

-0.52

Correlation Coefficient

Square Enix  CD Projekt

Excellent diversification

The 3 months correlation between Square and 7CD is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Square Enix Holdings and CD Projekt SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CD Projekt SA and Square Enix 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 Square Enix Holdings are associated (or correlated) with CD Projekt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CD Projekt SA has no effect on the direction of Square Enix i.e., Square Enix and CD Projekt go up and down completely randomly.

Pair Corralation between Square Enix and CD Projekt

Assuming the 90 days horizon Square Enix Holdings is expected to generate 41.38 times more return on investment than CD Projekt. However, Square Enix is 41.38 times more volatile than CD Projekt SA. It trades about 0.21 of its potential returns per unit of risk. CD Projekt SA is currently generating about 0.05 per unit of risk. If you would invest  7,220  in Square Enix Holdings on July 28, 2025 and sell it today you would lose (5,200) from holding Square Enix Holdings or give up 72.02% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.48%
Values	Daily Returns

Square Enix Holdings  vs.  CD Projekt SA

Square Enix Holdings

Risk-Adjusted Performance

Solid

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

CD Projekt SA

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in CD Projekt SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, CD Projekt is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Square Enix and CD Projekt

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

The idea behind Square Enix Holdings and CD Projekt SA 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.