Correlation Between Prosiebensat and One Media

Can any of the company-specific risk be diversified away by investing in both Prosiebensat and One Media 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 One Media 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 One Media iP, you can compare the effects of market volatilities on Prosiebensat and One Media 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 One Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosiebensat and One Media.

Diversification Opportunities for Prosiebensat and One Media

0.29

Correlation Coefficient

Prosiebensat  One Media

Modest diversification

The 3 months correlation between Prosiebensat and One is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Prosiebensat 1 Media and One Media iP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on One Media iP 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 One Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of One Media iP has no effect on the direction of Prosiebensat i.e., Prosiebensat and One Media go up and down completely randomly.

Pair Corralation between Prosiebensat and One Media

Assuming the 90 days trading horizon Prosiebensat 1 Media is expected to under-perform the One Media. But the stock apears to be less risky and, when comparing its historical volatility, Prosiebensat 1 Media is 1.09 times less risky than One Media. The stock trades about -0.09 of its potential returns per unit of risk. The One Media iP is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  425.00  in One Media iP on October 5, 2024 and sell it today you would earn a total of  0.00  from holding One Media iP or generate 0.0% return on investment over 90 days.

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

Prosiebensat 1 Media  vs.  One Media iP

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.

One Media iP

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in One Media iP are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, One Media is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Prosiebensat and One Media

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

The idea behind Prosiebensat 1 Media and One Media iP 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.