Correlation Between CEZ As and Movie Games
Can any of the company-specific risk be diversified away by investing in both CEZ As and Movie Games 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 Movie Games into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CEZ as and Movie Games SA, you can compare the effects of market volatilities on CEZ As and Movie Games 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 Movie Games. Check out your portfolio center. Please also check ongoing floating volatility patterns of CEZ As and Movie Games.
Diversification Opportunities for CEZ As and Movie Games
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CEZ and Movie is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding CEZ as and Movie Games SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Movie Games 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 Movie Games. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Movie Games SA has no effect on the direction of CEZ As i.e., CEZ As and Movie Games go up and down completely randomly.
Pair Corralation between CEZ As and Movie Games
Assuming the 90 days trading horizon CEZ as is expected to generate 0.91 times more return on investment than Movie Games. However, CEZ as is 1.1 times less risky than Movie Games. It trades about 0.15 of its potential returns per unit of risk. Movie Games SA is currently generating about -0.22 per unit of risk. If you would invest 14,830 in CEZ as on August 28, 2024 and sell it today you would earn a total of 1,670 from holding CEZ as or generate 11.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CEZ as vs. Movie Games SA
Performance |
| Timeline |
| CEZ as |
| Movie Games SA |
CEZ As and Movie Games Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CEZ As and Movie Games
The main advantage of trading using opposite CEZ As and Movie Games positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CEZ As position performs unexpectedly, Movie Games 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 Movie Games will offset losses from the drop in Movie Games' long position.The idea behind CEZ as and Movie Games 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.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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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