Correlation Between CEZ As and Brand 24
Can any of the company-specific risk be diversified away by investing in both CEZ As and Brand 24 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 Brand 24 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CEZ as and Brand 24 SA, you can compare the effects of market volatilities on CEZ As and Brand 24 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 Brand 24. Check out your portfolio center. Please also check ongoing floating volatility patterns of CEZ As and Brand 24.
Diversification Opportunities for CEZ As and Brand 24
Poor diversification
The 3 months correlation between CEZ and Brand is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding CEZ as and Brand 24 SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brand 24 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 Brand 24. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brand 24 SA has no effect on the direction of CEZ As i.e., CEZ As and Brand 24 go up and down completely randomly.
Pair Corralation between CEZ As and Brand 24
Assuming the 90 days trading horizon CEZ as is expected to generate 1.85 times more return on investment than Brand 24. However, CEZ As is 1.85 times more volatile than Brand 24 SA. It trades about 0.04 of its potential returns per unit of risk. Brand 24 SA is currently generating about 0.04 per unit of risk. If you would invest 15,555 in CEZ as on September 1, 2024 and sell it today you would earn a total of 895.00 from holding CEZ as or generate 5.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
CEZ as vs. Brand 24 SA
Performance |
| Timeline |
| CEZ as |
| Brand 24 SA |
CEZ As and Brand 24 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CEZ As and Brand 24
The main advantage of trading using opposite CEZ As and Brand 24 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CEZ As position performs unexpectedly, Brand 24 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 Brand 24 will offset losses from the drop in Brand 24's long position.| CEZ As vs. SOFTWARE MANSION SPOLKA | CEZ As vs. LSI Software SA | CEZ As vs. PMPG Polskie Media | CEZ As vs. Globe Trade Centre |
| Brand 24 vs. Banco Santander SA | Brand 24 vs. UniCredit SpA | Brand 24 vs. CEZ as | Brand 24 vs. Polski Koncern Naftowy |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |