Correlation Between Southern and CEZ A
Can any of the company-specific risk be diversified away by investing in both Southern and CEZ A 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 Southern and CEZ A into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Southern and CEZ a s, you can compare the effects of market volatilities on Southern and CEZ A 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 Southern with a short position of CEZ A. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern and CEZ A.
Diversification Opportunities for Southern and CEZ A
Very good diversification
The 3 months correlation between Southern and CEZ is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding The Southern and CEZ a s in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEZ a s and Southern 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 The Southern are associated (or correlated) with CEZ A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEZ a s has no effect on the direction of Southern i.e., Southern and CEZ A go up and down completely randomly.
Pair Corralation between Southern and CEZ A
Assuming the 90 days horizon The Southern is expected to under-perform the CEZ A. In addition to that, Southern is 1.05 times more volatile than CEZ a s. It trades about -0.02 of its total potential returns per unit of risk. CEZ a s is currently generating about 0.33 per unit of volatility. If you would invest 3,768 in CEZ a s on November 2, 2024 and sell it today you would earn a total of 502.00 from holding CEZ a s or generate 13.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
The Southern vs. CEZ a s
Performance |
| Timeline |
| Southern |
| CEZ a s |
Southern and CEZ A Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern and CEZ A
The main advantage of trading using opposite Southern and CEZ A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern position performs unexpectedly, CEZ A 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 A will offset losses from the drop in CEZ A's long position.| Southern vs. Coffee Holding Co | Southern vs. NTT DATA | Southern vs. FORMPIPE SOFTWARE AB | Southern vs. Beta Systems Software |
| CEZ A vs. THRACE PLASTICS | CEZ A vs. Plastic Omnium | CEZ A vs. Vulcan Materials | CEZ A vs. The Boston Beer |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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