Correlation Between CEZ As and Ailleron
Can any of the company-specific risk be diversified away by investing in both CEZ As and Ailleron 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 As and Ailleron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CEZ as and Ailleron SA, you can compare the effects of market volatilities on CEZ As and Ailleron 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 As with a short position of Ailleron. Check out your portfolio center. Please also check ongoing floating volatility patterns of CEZ As and Ailleron.
Diversification Opportunities for CEZ As and Ailleron
Poor diversification
The 3 months correlation between CEZ and Ailleron is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding CEZ as and Ailleron SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ailleron SA and CEZ As 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 as are associated (or correlated) with Ailleron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ailleron SA has no effect on the direction of CEZ As i.e., CEZ As and Ailleron go up and down completely randomly.
Pair Corralation between CEZ As and Ailleron
Assuming the 90 days trading horizon CEZ as is expected to generate 1.93 times more return on investment than Ailleron. However, CEZ As is 1.93 times more volatile than Ailleron SA. It trades about 0.05 of its potential returns per unit of risk. Ailleron SA is currently generating about 0.07 per unit of risk. If you would invest 15,700 in CEZ as on September 5, 2024 and sell it today you would earn a total of 320.00 from holding CEZ as or generate 2.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CEZ as vs. Ailleron SA
Performance |
| Timeline |
| CEZ as |
| Ailleron SA |
CEZ As and Ailleron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CEZ As and Ailleron
The main advantage of trading using opposite CEZ As and Ailleron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CEZ As position performs unexpectedly, Ailleron 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 Ailleron will offset losses from the drop in Ailleron's long position.The idea behind CEZ as and Ailleron 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.| Ailleron vs. Asseco Business Solutions | Ailleron vs. Detalion Games SA | Ailleron vs. Kogeneracja SA | Ailleron vs. Asseco South Eastern |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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