Correlation Between CENTURIA OFFICE and PROSIEBENSAT1 MEDIADR4/

Can any of the company-specific risk be diversified away by investing in both CENTURIA OFFICE and PROSIEBENSAT1 MEDIADR4/ 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 CENTURIA OFFICE and PROSIEBENSAT1 MEDIADR4/ into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CENTURIA OFFICE REIT and PROSIEBENSAT1 MEDIADR4, you can compare the effects of market volatilities on CENTURIA OFFICE and PROSIEBENSAT1 MEDIADR4/ 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 CENTURIA OFFICE with a short position of PROSIEBENSAT1 MEDIADR4/. Check out your portfolio center. Please also check ongoing floating volatility patterns of CENTURIA OFFICE and PROSIEBENSAT1 MEDIADR4/.

Diversification Opportunities for CENTURIA OFFICE and PROSIEBENSAT1 MEDIADR4/

0.42

Correlation Coefficient

CENTURIA OFFICE  PROSIEBENSAT1 MEDIADR4/

Very weak diversification

The 3 months correlation between CENTURIA and PROSIEBENSAT1 is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding CENTURIA OFFICE REIT and PROSIEBENSAT1 MEDIADR4 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PROSIEBENSAT1 MEDIADR4/ and CENTURIA OFFICE 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 CENTURIA OFFICE REIT are associated (or correlated) with PROSIEBENSAT1 MEDIADR4/. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PROSIEBENSAT1 MEDIADR4/ has no effect on the direction of CENTURIA OFFICE i.e., CENTURIA OFFICE and PROSIEBENSAT1 MEDIADR4/ go up and down completely randomly.

Pair Corralation between CENTURIA OFFICE and PROSIEBENSAT1 MEDIADR4/

Assuming the 90 days horizon CENTURIA OFFICE REIT is expected to under-perform the PROSIEBENSAT1 MEDIADR4/. But the stock apears to be less risky and, when comparing its historical volatility, CENTURIA OFFICE REIT is 1.66 times less risky than PROSIEBENSAT1 MEDIADR4/. The stock trades about -0.08 of its potential returns per unit of risk. The PROSIEBENSAT1 MEDIADR4 is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  135.00  in PROSIEBENSAT1 MEDIADR4 on September 23, 2024 and sell it today you would lose (10.00) from holding PROSIEBENSAT1 MEDIADR4 or give up 7.41% of portfolio value over 90 days.

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

CENTURIA OFFICE REIT  vs.  PROSIEBENSAT1 MEDIADR4

CENTURIA OFFICE REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CENTURIA OFFICE REIT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

PROSIEBENSAT1 MEDIADR4/

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PROSIEBENSAT1 MEDIADR4 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, PROSIEBENSAT1 MEDIADR4/ is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CENTURIA OFFICE and PROSIEBENSAT1 MEDIADR4/

The main advantage of trading using opposite CENTURIA OFFICE and PROSIEBENSAT1 MEDIADR4/ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CENTURIA OFFICE position performs unexpectedly, PROSIEBENSAT1 MEDIADR4/ 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 PROSIEBENSAT1 MEDIADR4/ will offset losses from the drop in PROSIEBENSAT1 MEDIADR4/'s long position.

The idea behind CENTURIA OFFICE REIT and PROSIEBENSAT1 MEDIADR4 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.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.