Correlation Between Aeorema Communications and Prosiebensat
Can any of the company-specific risk be diversified away by investing in both Aeorema Communications 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 Aeorema Communications and Prosiebensat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aeorema Communications Plc and Prosiebensat 1 Media, you can compare the effects of market volatilities on Aeorema Communications 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 Aeorema Communications with a short position of Prosiebensat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aeorema Communications and Prosiebensat.
Diversification Opportunities for Aeorema Communications and Prosiebensat
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Aeorema and Prosiebensat is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Aeorema Communications Plc 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 Aeorema Communications 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 Aeorema Communications Plc 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 Aeorema Communications i.e., Aeorema Communications and Prosiebensat go up and down completely randomly.
Pair Corralation between Aeorema Communications and Prosiebensat
Assuming the 90 days trading horizon Aeorema Communications Plc is expected to under-perform the Prosiebensat. But the stock apears to be less risky and, when comparing its historical volatility, Aeorema Communications Plc is 1.18 times less risky than Prosiebensat. The stock trades about -0.15 of its potential returns per unit of risk. The Prosiebensat 1 Media is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 514.00 in Prosiebensat 1 Media on November 7, 2024 and sell it today you would earn a total of 47.00 from holding Prosiebensat 1 Media or generate 9.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aeorema Communications Plc vs. Prosiebensat 1 Media
Performance |
| Timeline |
| Aeorema Communications |
| Prosiebensat 1 Media |
Aeorema Communications and Prosiebensat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aeorema Communications and Prosiebensat
The main advantage of trading using opposite Aeorema Communications and Prosiebensat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aeorema Communications 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.| Aeorema Communications vs. Sovereign Metals | Aeorema Communications vs. Lindsell Train Investment | Aeorema Communications vs. Golden Metal Resources | Aeorema Communications vs. AMG Advanced Metallurgical |
| Prosiebensat vs. Zinc Media Group | Prosiebensat vs. XLMedia PLC | Prosiebensat vs. Hollywood Bowl Group | Prosiebensat vs. Universal Display Corp |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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