Correlation Between Prosiebensat and CNH Industrial

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

By analyzing existing cross correlation between Prosiebensat 1 Media and CNH Industrial NV, you can compare the effects of market volatilities on Prosiebensat and CNH Industrial 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 Prosiebensat with a short position of CNH Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosiebensat and CNH Industrial.

Diversification Opportunities for Prosiebensat and CNH Industrial

-0.61

Correlation Coefficient

Prosiebensat  CNH Industrial

Excellent diversification

The 3 months correlation between Prosiebensat and CNH is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Prosiebensat 1 Media and CNH Industrial NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNH Industrial NV and Prosiebensat 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 Prosiebensat 1 Media are associated (or correlated) with CNH Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNH Industrial NV has no effect on the direction of Prosiebensat i.e., Prosiebensat and CNH Industrial go up and down completely randomly.

Pair Corralation between Prosiebensat and CNH Industrial

Assuming the 90 days trading horizon Prosiebensat 1 Media is expected to under-perform the CNH Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Prosiebensat 1 Media is 1.15 times less risky than CNH Industrial. The stock trades about -0.04 of its potential returns per unit of risk. The CNH Industrial NV is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,463  in CNH Industrial NV on October 11, 2024 and sell it today you would lose (408.00) from holding CNH Industrial NV or give up 27.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	93.36%
Values	Daily Returns

Prosiebensat 1 Media  vs.  CNH Industrial NV

Prosiebensat 1 Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prosiebensat 1 Media has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

CNH Industrial NV

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CNH Industrial NV are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, CNH Industrial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Prosiebensat and CNH Industrial

The main advantage of trading using opposite Prosiebensat and CNH Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prosiebensat position performs unexpectedly, CNH Industrial 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 CNH Industrial will offset losses from the drop in CNH Industrial's long position.

The idea behind Prosiebensat 1 Media and CNH Industrial NV 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.