Correlation Between CEZ As and APS Energia
Can any of the company-specific risk be diversified away by investing in both CEZ As and APS Energia 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 APS Energia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CEZ as and APS Energia SA, you can compare the effects of market volatilities on CEZ As and APS Energia 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 APS Energia. Check out your portfolio center. Please also check ongoing floating volatility patterns of CEZ As and APS Energia.
Diversification Opportunities for CEZ As and APS Energia
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CEZ and APS is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding CEZ as and APS Energia SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APS Energia 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 APS Energia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APS Energia SA has no effect on the direction of CEZ As i.e., CEZ As and APS Energia go up and down completely randomly.
Pair Corralation between CEZ As and APS Energia
Assuming the 90 days trading horizon CEZ as is expected to generate 0.47 times more return on investment than APS Energia. However, CEZ as is 2.13 times less risky than APS Energia. It trades about 0.05 of its potential returns per unit of risk. APS Energia SA is currently generating about 0.01 per unit of risk. If you would invest 11,691 in CEZ as on August 30, 2024 and sell it today you would earn a total of 4,619 from holding CEZ as or generate 39.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CEZ as vs. APS Energia SA
Performance |
| Timeline |
| CEZ as |
| APS Energia SA |
CEZ As and APS Energia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CEZ As and APS Energia
The main advantage of trading using opposite CEZ As and APS Energia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CEZ As position performs unexpectedly, APS Energia 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 APS Energia will offset losses from the drop in APS Energia's long position.| CEZ As vs. Asseco Business Solutions | CEZ As vs. Detalion Games SA | CEZ As vs. CFI Holding SA | CEZ As vs. HM Inwest SA |
| APS Energia vs. Asseco Business Solutions | APS Energia vs. Detalion Games SA | APS Energia vs. Asseco South Eastern | APS Energia vs. Vercom SA |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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