Correlation Between GI Group and CEZ As
Can any of the company-specific risk be diversified away by investing in both GI Group and CEZ As 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 GI Group and CEZ As into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GI Group Poland and CEZ as, you can compare the effects of market volatilities on GI Group and CEZ As 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 GI Group with a short position of CEZ As. Check out your portfolio center. Please also check ongoing floating volatility patterns of GI Group and CEZ As.
Diversification Opportunities for GI Group and CEZ As
Very good diversification
The 3 months correlation between GIG and CEZ is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding GI Group Poland and CEZ as in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEZ as and GI Group 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 GI Group Poland are associated (or correlated) with CEZ As. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEZ as has no effect on the direction of GI Group i.e., GI Group and CEZ As go up and down completely randomly.
Pair Corralation between GI Group and CEZ As
Assuming the 90 days trading horizon GI Group is expected to generate 28.88 times less return on investment than CEZ As. But when comparing it to its historical volatility, GI Group Poland is 2.23 times less risky than CEZ As. It trades about 0.01 of its potential returns per unit of risk. CEZ as is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 15,680 in CEZ as on September 18, 2024 and sell it today you would earn a total of 580.00 from holding CEZ as or generate 3.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
GI Group Poland vs. CEZ as
Performance |
| Timeline |
| GI Group Poland |
| CEZ as |
GI Group and CEZ As Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GI Group and CEZ As
The main advantage of trading using opposite GI Group and CEZ As positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GI Group position performs unexpectedly, CEZ As 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 CEZ As will offset losses from the drop in CEZ As' long position.| GI Group vs. New Tech Venture | GI Group vs. True Games Syndicate | GI Group vs. Enter Air SA | GI Group vs. Pyramid Games SA |
| CEZ As vs. Asseco Business Solutions | CEZ As vs. Asseco South Eastern | CEZ As vs. HM Inwest SA | CEZ As vs. Movie Games 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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