Correlation Between Chocoladefabriken and Prosiebensat
Can any of the company-specific risk be diversified away by investing in both Chocoladefabriken and Prosiebensat 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 Chocoladefabriken and Prosiebensat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chocoladefabriken Lindt Spruengli and Prosiebensat 1 Media, you can compare the effects of market volatilities on Chocoladefabriken and Prosiebensat 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 Chocoladefabriken with a short position of Prosiebensat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chocoladefabriken and Prosiebensat.
Diversification Opportunities for Chocoladefabriken and Prosiebensat
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chocoladefabriken and Prosiebensat is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Chocoladefabriken Lindt Spruen and Prosiebensat 1 Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prosiebensat 1 Media and Chocoladefabriken 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 Chocoladefabriken Lindt Spruengli are associated (or correlated) with Prosiebensat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prosiebensat 1 Media has no effect on the direction of Chocoladefabriken i.e., Chocoladefabriken and Prosiebensat go up and down completely randomly.
Pair Corralation between Chocoladefabriken and Prosiebensat
Assuming the 90 days trading horizon Chocoladefabriken Lindt Spruengli is expected to under-perform the Prosiebensat. But the stock apears to be less risky and, when comparing its historical volatility, Chocoladefabriken Lindt Spruengli is 2.59 times less risky than Prosiebensat. The stock trades about -0.02 of its potential returns per unit of risk. The Prosiebensat 1 Media is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 546.00 in Prosiebensat 1 Media on November 5, 2024 and sell it today you would earn a total of 12.00 from holding Prosiebensat 1 Media or generate 2.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.2% |
| Values | Daily Returns |
Chocoladefabriken Lindt Spruen vs. Prosiebensat 1 Media
Performance |
| Timeline |
| Chocoladefabriken Lindt |
| Prosiebensat 1 Media |
Chocoladefabriken and Prosiebensat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chocoladefabriken and Prosiebensat
The main advantage of trading using opposite Chocoladefabriken and Prosiebensat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chocoladefabriken position performs unexpectedly, Prosiebensat 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 Prosiebensat will offset losses from the drop in Prosiebensat's long position.The idea behind Chocoladefabriken Lindt Spruengli and Prosiebensat 1 Media 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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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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