Correlation Between CEZ As and Varsav Game

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

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

Diversification Opportunities for CEZ As and Varsav Game

-0.12

Correlation Coefficient

CEZ As  Varsav Game

Good diversification

The 3 months correlation between CEZ and Varsav is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding CEZ as and Varsav Game Studios in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Varsav Game Studios 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 Varsav Game. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Varsav Game Studios has no effect on the direction of CEZ As i.e., CEZ As and Varsav Game go up and down completely randomly.

Pair Corralation between CEZ As and Varsav Game

Assuming the 90 days trading horizon CEZ as is expected to generate 0.42 times more return on investment than Varsav Game. However, CEZ as is 2.36 times less risky than Varsav Game. It trades about 0.14 of its potential returns per unit of risk. Varsav Game Studios is currently generating about 0.05 per unit of risk. If you would invest  16,170  in CEZ as on December 30, 2024 and sell it today you would earn a total of  2,710  from holding CEZ as or generate 16.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.65%
Values	Daily Returns

CEZ as  vs.  Varsav Game Studios

CEZ as

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CEZ as are ranked lower than 10 (%) 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.

Varsav Game Studios

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Varsav Game Studios are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Varsav Game reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CEZ As and Varsav Game

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

The idea behind CEZ as and Varsav Game Studios 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.