Correlation Between CEZ A and Southern
Can any of the company-specific risk be diversified away by investing in both CEZ A and Southern 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 CEZ A and Southern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CEZ a s and The Southern, you can compare the effects of market volatilities on CEZ A and Southern 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 CEZ A with a short position of Southern. Check out your portfolio center. Please also check ongoing floating volatility patterns of CEZ A and Southern.
Diversification Opportunities for CEZ A and Southern
Very weak diversification
The 3 months correlation between CEZ and Southern is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding CEZ a s and The Southern in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern and CEZ A 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 CEZ a s are associated (or correlated) with Southern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern has no effect on the direction of CEZ A i.e., CEZ A and Southern go up and down completely randomly.
Pair Corralation between CEZ A and Southern
Assuming the 90 days horizon CEZ a s is expected to generate 0.78 times more return on investment than Southern. However, CEZ a s is 1.28 times less risky than Southern. It trades about 0.26 of its potential returns per unit of risk. The Southern is currently generating about 0.1 per unit of risk. If you would invest 3,588 in CEZ a s on August 30, 2024 and sell it today you would earn a total of 210.00 from holding CEZ a s or generate 5.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CEZ a s vs. The Southern
Performance |
| Timeline |
| CEZ a s |
| Southern |
CEZ A and Southern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CEZ A and Southern
The main advantage of trading using opposite CEZ A and Southern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CEZ A position performs unexpectedly, Southern 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 Southern will offset losses from the drop in Southern's long position.| CEZ A vs. Superior Plus Corp | CEZ A vs. SIVERS SEMICONDUCTORS AB | CEZ A vs. Talanx AG | CEZ A vs. 2G ENERGY |
| Southern vs. Superior Plus Corp | Southern vs. SIVERS SEMICONDUCTORS AB | Southern vs. Talanx AG | Southern vs. 2G ENERGY |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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