Correlation Between CN MODERN and CEZ A

Can any of the company-specific risk be diversified away by investing in both CN MODERN 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 CN MODERN and CEZ A into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CN MODERN DAIRY and CEZ a s, you can compare the effects of market volatilities on CN MODERN 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 CN MODERN with a short position of CEZ A. Check out your portfolio center. Please also check ongoing floating volatility patterns of CN MODERN and CEZ A.

Diversification Opportunities for CN MODERN and CEZ A

0.44

Correlation Coefficient

CN MODERN  CEZ A

Very weak diversification

The 3 months correlation between 07M and CEZ is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding CN MODERN DAIRY 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 CN MODERN 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 CN MODERN DAIRY 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 CN MODERN i.e., CN MODERN and CEZ A go up and down completely randomly.

Pair Corralation between CN MODERN and CEZ A

Assuming the 90 days trading horizon CN MODERN DAIRY is expected to generate 3.35 times more return on investment than CEZ A. However, CN MODERN is 3.35 times more volatile than CEZ a s. It trades about 0.08 of its potential returns per unit of risk. CEZ a s is currently generating about 0.13 per unit of risk. If you would invest  11.00  in CN MODERN DAIRY on December 18, 2024 and sell it today you would earn a total of  2.00  from holding CN MODERN DAIRY or generate 18.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

CN MODERN DAIRY  vs.  CEZ a s

CN MODERN DAIRY

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CN MODERN DAIRY are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile primary indicators, CN MODERN exhibited solid returns over the last few months and may actually be approaching a breakup point.

CEZ a s

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CEZ a s are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CEZ A may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with CN MODERN and CEZ A

The main advantage of trading using opposite CN MODERN and CEZ A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CN MODERN 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.

The idea behind CN MODERN DAIRY and CEZ a s 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.

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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.