Correlation Between CEZ As and RAFAKO SA
Can any of the company-specific risk be diversified away by investing in both CEZ As and RAFAKO SA 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 RAFAKO SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CEZ as and RAFAKO SA, you can compare the effects of market volatilities on CEZ As and RAFAKO SA 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 RAFAKO SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of CEZ As and RAFAKO SA.
Diversification Opportunities for CEZ As and RAFAKO SA
Weak diversification
The 3 months correlation between CEZ and RAFAKO is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding CEZ as and RAFAKO SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RAFAKO 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 RAFAKO SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RAFAKO SA has no effect on the direction of CEZ As i.e., CEZ As and RAFAKO SA go up and down completely randomly.
Pair Corralation between CEZ As and RAFAKO SA
Assuming the 90 days trading horizon CEZ As is expected to generate 1.85 times less return on investment than RAFAKO SA. But when comparing it to its historical volatility, CEZ as is 5.16 times less risky than RAFAKO SA. It trades about 0.18 of its potential returns per unit of risk. RAFAKO SA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 32.00 in RAFAKO SA on November 3, 2024 and sell it today you would earn a total of 1.00 from holding RAFAKO SA or generate 3.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CEZ as vs. RAFAKO SA
Performance |
| Timeline |
| CEZ as |
| RAFAKO SA |
CEZ As and RAFAKO SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CEZ As and RAFAKO SA
The main advantage of trading using opposite CEZ As and RAFAKO SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CEZ As position performs unexpectedly, RAFAKO SA 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 RAFAKO SA will offset losses from the drop in RAFAKO SA's long position.| CEZ As vs. Gremi Media SA | CEZ As vs. ING Bank lski | CEZ As vs. Varsav Game Studios | CEZ As vs. True Games Syndicate |
| RAFAKO SA vs. M Food SA | RAFAKO SA vs. Mlk Foods Public | RAFAKO SA vs. Play2Chill SA | RAFAKO SA vs. Globe Trade Centre |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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