Correlation Between CEZ As and New Tech

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

By analyzing existing cross correlation between CEZ as and New Tech Capital, you can compare the effects of market volatilities on CEZ As and New Tech 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 New Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of CEZ As and New Tech.

Diversification Opportunities for CEZ As and New Tech

-0.83

Correlation Coefficient

CEZ As  New Tech

Pay attention - limited upside

The 3 months correlation between CEZ and New is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding CEZ as and New Tech Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Tech Capital 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 New Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Tech Capital has no effect on the direction of CEZ As i.e., CEZ As and New Tech go up and down completely randomly.

Pair Corralation between CEZ As and New Tech

Assuming the 90 days trading horizon CEZ As is expected to generate 1.06 times less return on investment than New Tech. But when comparing it to its historical volatility, CEZ as is 2.03 times less risky than New Tech. It trades about 0.25 of its potential returns per unit of risk. New Tech Capital is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  77.00  in New Tech Capital on October 9, 2024 and sell it today you would earn a total of  5.00  from holding New Tech Capital or generate 6.49% return on investment over 90 days.

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

CEZ as  vs.  New Tech Capital

CEZ as

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CEZ as are ranked lower than 12 (%) 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.

New Tech Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days New Tech Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with CEZ As and New Tech

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

The idea behind CEZ as and New Tech Capital 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.