Correlation Between Biztech Konsulting and CEZ As

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

By analyzing existing cross correlation between Biztech Konsulting SA and CEZ as, you can compare the effects of market volatilities on Biztech Konsulting and CEZ As 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 Biztech Konsulting with a short position of CEZ As. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biztech Konsulting and CEZ As.

Diversification Opportunities for Biztech Konsulting and CEZ As

0.58

Correlation Coefficient

Biztech Konsulting  CEZ As

Very weak diversification

The 3 months correlation between Biztech and CEZ is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Biztech Konsulting SA and CEZ as in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEZ as and Biztech Konsulting 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 Biztech Konsulting SA are associated (or correlated) with CEZ As. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEZ as has no effect on the direction of Biztech Konsulting i.e., Biztech Konsulting and CEZ As go up and down completely randomly.

Pair Corralation between Biztech Konsulting and CEZ As

Assuming the 90 days trading horizon Biztech Konsulting SA is expected to generate 2.28 times more return on investment than CEZ As. However, Biztech Konsulting is 2.28 times more volatile than CEZ as. It trades about 0.09 of its potential returns per unit of risk. CEZ as is currently generating about -0.04 per unit of risk. If you would invest  17.00  in Biztech Konsulting SA on September 24, 2024 and sell it today you would earn a total of  1.00  from holding Biztech Konsulting SA or generate 5.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	90.48%
Values	Daily Returns

Biztech Konsulting SA  vs.  CEZ as

Biztech Konsulting

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Biztech Konsulting SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Biztech Konsulting reported solid returns over the last few months and may actually be approaching a breakup point.

CEZ as

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CEZ as are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, CEZ As may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Biztech Konsulting and CEZ As

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

The idea behind Biztech Konsulting SA and CEZ as 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.