Correlation Between CEZ As and CD PROJEKT
Can any of the company-specific risk be diversified away by investing in both CEZ As and CD PROJEKT 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 CD PROJEKT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CEZ as and CD PROJEKT SA, you can compare the effects of market volatilities on CEZ As and CD PROJEKT 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 CD PROJEKT. Check out your portfolio center. Please also check ongoing floating volatility patterns of CEZ As and CD PROJEKT.
Diversification Opportunities for CEZ As and CD PROJEKT
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CEZ and CDR is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding CEZ as and CD PROJEKT SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CD PROJEKT 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 CD PROJEKT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CD PROJEKT SA has no effect on the direction of CEZ As i.e., CEZ As and CD PROJEKT go up and down completely randomly.
Pair Corralation between CEZ As and CD PROJEKT
Assuming the 90 days trading horizon CEZ As is expected to generate 3.0 times less return on investment than CD PROJEKT. But when comparing it to its historical volatility, CEZ as is 1.42 times less risky than CD PROJEKT. It trades about 0.02 of its potential returns per unit of risk. CD PROJEKT SA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 14,038 in CD PROJEKT SA on September 2, 2024 and sell it today you would earn a total of 2,682 from holding CD PROJEKT SA or generate 19.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CEZ as vs. CD PROJEKT SA
Performance |
| Timeline |
| CEZ as |
| CD PROJEKT SA |
CEZ As and CD PROJEKT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CEZ As and CD PROJEKT
The main advantage of trading using opposite CEZ As and CD PROJEKT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CEZ As position performs unexpectedly, CD PROJEKT 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 CD PROJEKT will offset losses from the drop in CD PROJEKT's long position.| CEZ As vs. Asseco Business Solutions | CEZ As vs. Detalion Games SA | CEZ As vs. Asseco South Eastern | CEZ As vs. CFI Holding SA |
| CD PROJEKT vs. LPP SA | CD PROJEKT vs. Stalprodukt SA | CD PROJEKT vs. mBank SA | CD PROJEKT vs. Santander Bank Polska |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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