Correlation Between ARISTOCRAT LEISURE and ProSiebenSat1 Media

Can any of the company-specific risk be diversified away by investing in both ARISTOCRAT LEISURE and ProSiebenSat1 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 ARISTOCRAT LEISURE and ProSiebenSat1 Media into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ARISTOCRAT LEISURE and ProSiebenSat1 Media SE, you can compare the effects of market volatilities on ARISTOCRAT LEISURE and ProSiebenSat1 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 ARISTOCRAT LEISURE with a short position of ProSiebenSat1 Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARISTOCRAT LEISURE and ProSiebenSat1 Media.

Diversification Opportunities for ARISTOCRAT LEISURE and ProSiebenSat1 Media

-0.65

Correlation Coefficient

ARISTOCRAT LEISURE  ProSiebenSat1 Media

Excellent diversification

The 3 months correlation between ARISTOCRAT and ProSiebenSat1 is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding ARISTOCRAT LEISURE and ProSiebenSat1 Media SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProSiebenSat1 Media and ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE are associated (or correlated) with ProSiebenSat1 Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProSiebenSat1 Media has no effect on the direction of ARISTOCRAT LEISURE i.e., ARISTOCRAT LEISURE and ProSiebenSat1 Media go up and down completely randomly.

Pair Corralation between ARISTOCRAT LEISURE and ProSiebenSat1 Media

Assuming the 90 days trading horizon ARISTOCRAT LEISURE is expected to generate 0.57 times more return on investment than ProSiebenSat1 Media. However, ARISTOCRAT LEISURE is 1.75 times less risky than ProSiebenSat1 Media. It trades about 0.24 of its potential returns per unit of risk. ProSiebenSat1 Media SE is currently generating about -0.07 per unit of risk. If you would invest  2,385  in ARISTOCRAT LEISURE on October 9, 2024 and sell it today you would earn a total of  1,815  from holding ARISTOCRAT LEISURE or generate 76.1% return on investment over 90 days.

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

ARISTOCRAT LEISURE  vs.  ProSiebenSat1 Media SE

ARISTOCRAT LEISURE

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ARISTOCRAT LEISURE are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, ARISTOCRAT LEISURE unveiled solid returns over the last few months and may actually be approaching a breakup point.

ProSiebenSat1 Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProSiebenSat1 Media SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with ARISTOCRAT LEISURE and ProSiebenSat1 Media

The main advantage of trading using opposite ARISTOCRAT LEISURE and ProSiebenSat1 Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARISTOCRAT LEISURE position performs unexpectedly, ProSiebenSat1 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 ProSiebenSat1 Media will offset losses from the drop in ProSiebenSat1 Media's long position.

The idea behind ARISTOCRAT LEISURE and ProSiebenSat1 Media SE 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .