Correlation Between CEZ As and Selena FM
Can any of the company-specific risk be diversified away by investing in both CEZ As and Selena FM 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 Selena FM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CEZ as and Selena FM SA, you can compare the effects of market volatilities on CEZ As and Selena FM 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 Selena FM. Check out your portfolio center. Please also check ongoing floating volatility patterns of CEZ As and Selena FM.
Diversification Opportunities for CEZ As and Selena FM
Excellent diversification
The 3 months correlation between CEZ and Selena is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding CEZ as and Selena FM SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Selena FM 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 Selena FM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Selena FM SA has no effect on the direction of CEZ As i.e., CEZ As and Selena FM go up and down completely randomly.
Pair Corralation between CEZ As and Selena FM
Assuming the 90 days trading horizon CEZ As is expected to generate 1.13 times less return on investment than Selena FM. But when comparing it to its historical volatility, CEZ as is 1.2 times less risky than Selena FM. It trades about 0.05 of its potential returns per unit of risk. Selena FM SA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,140 in Selena FM SA on August 30, 2024 and sell it today you would earn a total of 900.00 from holding Selena FM SA or generate 42.06% 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. Selena FM SA
Performance |
| Timeline |
| CEZ as |
| Selena FM SA |
CEZ As and Selena FM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CEZ As and Selena FM
The main advantage of trading using opposite CEZ As and Selena FM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CEZ As position performs unexpectedly, Selena FM 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 Selena FM will offset losses from the drop in Selena FM'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 |
| Selena FM vs. Banco Santander SA | Selena FM vs. UniCredit SpA | Selena FM vs. CEZ as | Selena FM 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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