Correlation Between AstraZeneca PLC and Prosiebensat

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

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

Diversification Opportunities for AstraZeneca PLC and Prosiebensat

0.8

Correlation Coefficient

AstraZeneca PLC  Prosiebensat

Very poor diversification

The 3 months correlation between AstraZeneca and Prosiebensat is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding AstraZeneca PLC and Prosiebensat 1 Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prosiebensat 1 Media and AstraZeneca PLC 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 AstraZeneca PLC are associated (or correlated) with Prosiebensat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prosiebensat 1 Media has no effect on the direction of AstraZeneca PLC i.e., AstraZeneca PLC and Prosiebensat go up and down completely randomly.

Pair Corralation between AstraZeneca PLC and Prosiebensat

Assuming the 90 days trading horizon AstraZeneca PLC is expected to generate 2.95 times less return on investment than Prosiebensat. But when comparing it to its historical volatility, AstraZeneca PLC is 1.87 times less risky than Prosiebensat. It trades about 0.11 of its potential returns per unit of risk. Prosiebensat 1 Media is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  505.00  in Prosiebensat 1 Media on December 27, 2024 and sell it today you would earn a total of  143.00  from holding Prosiebensat 1 Media or generate 28.32% return on investment over 90 days.

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

AstraZeneca PLC  vs.  Prosiebensat 1 Media

AstraZeneca PLC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AstraZeneca PLC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, AstraZeneca PLC may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Prosiebensat 1 Media

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Prosiebensat 1 Media are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Prosiebensat unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AstraZeneca PLC and Prosiebensat

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

The idea behind AstraZeneca PLC and Prosiebensat 1 Media 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.