Correlation Between CEZ As and Balticon
Can any of the company-specific risk be diversified away by investing in both CEZ As and Balticon 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 Balticon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CEZ as and Balticon, you can compare the effects of market volatilities on CEZ As and Balticon 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 Balticon. Check out your portfolio center. Please also check ongoing floating volatility patterns of CEZ As and Balticon.
Diversification Opportunities for CEZ As and Balticon
Excellent diversification
The 3 months correlation between CEZ and Balticon is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding CEZ as and Balticon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balticon 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 Balticon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balticon has no effect on the direction of CEZ As i.e., CEZ As and Balticon go up and down completely randomly.
Pair Corralation between CEZ As and Balticon
Assuming the 90 days trading horizon CEZ As is expected to generate 1.41 times less return on investment than Balticon. But when comparing it to its historical volatility, CEZ as is 2.13 times less risky than Balticon. It trades about 0.05 of its potential returns per unit of risk. Balticon is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,136 in Balticon on August 30, 2024 and sell it today you would earn a total of 204.00 from holding Balticon or generate 17.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 71.05% |
| Values | Daily Returns |
CEZ as vs. Balticon
Performance |
| Timeline |
| CEZ as |
| Balticon |
CEZ As and Balticon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CEZ As and Balticon
The main advantage of trading using opposite CEZ As and Balticon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CEZ As position performs unexpectedly, Balticon 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 Balticon will offset losses from the drop in Balticon'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 |
| Balticon vs. LSI Software SA | Balticon vs. Road Studio SA | Balticon vs. SOFTWARE MANSION SPOLKA | Balticon vs. Enter Air 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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