Correlation Between Cez AS and Kofola CeskoSlovensko

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

By analyzing existing cross correlation between Cez AS and Kofola CeskoSlovensko as, you can compare the effects of market volatilities on Cez AS and Kofola CeskoSlovensko 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 Cez AS with a short position of Kofola CeskoSlovensko. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cez AS and Kofola CeskoSlovensko.

Diversification Opportunities for Cez AS and Kofola CeskoSlovensko

0.55

Correlation Coefficient

Cez AS  Kofola CeskoSlovensko

Very weak diversification

The 3 months correlation between Cez and Kofola is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Cez AS and Kofola CeskoSlovensko as in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kofola CeskoSlovensko and Cez AS 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 Cez AS are associated (or correlated) with Kofola CeskoSlovensko. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kofola CeskoSlovensko has no effect on the direction of Cez AS i.e., Cez AS and Kofola CeskoSlovensko go up and down completely randomly.

Pair Corralation between Cez AS and Kofola CeskoSlovensko

Assuming the 90 days trading horizon Cez AS is expected to generate 0.97 times more return on investment than Kofola CeskoSlovensko. However, Cez AS is 1.03 times less risky than Kofola CeskoSlovensko. It trades about 0.22 of its potential returns per unit of risk. Kofola CeskoSlovensko as is currently generating about 0.18 per unit of risk. If you would invest  95,700  in Cez AS on December 30, 2024 and sell it today you would earn a total of  17,000  from holding Cez AS or generate 17.76% return on investment over 90 days.

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

Cez AS  vs.  Kofola CeskoSlovensko as

Cez AS

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cez AS are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Cez AS reported solid returns over the last few months and may actually be approaching a breakup point.

Kofola CeskoSlovensko

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kofola CeskoSlovensko as are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Kofola CeskoSlovensko reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cez AS and Kofola CeskoSlovensko

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

The idea behind Cez AS and Kofola CeskoSlovensko 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.