Correlation Between CEZ A and Astra Energy

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

By analyzing existing cross correlation between CEZ A S and Astra Energy, you can compare the effects of market volatilities on CEZ A and Astra Energy 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 A with a short position of Astra Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of CEZ A and Astra Energy.

Diversification Opportunities for CEZ A and Astra Energy

-0.41

Correlation Coefficient

CEZ A  Astra Energy

Very good diversification

The 3 months correlation between CEZ and Astra is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding CEZ A S and Astra Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astra Energy and CEZ A 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 A S are associated (or correlated) with Astra Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astra Energy has no effect on the direction of CEZ A i.e., CEZ A and Astra Energy go up and down completely randomly.

Pair Corralation between CEZ A and Astra Energy

Assuming the 90 days horizon CEZ A is expected to generate 1.07 times less return on investment than Astra Energy. But when comparing it to its historical volatility, CEZ A S is 2.11 times less risky than Astra Energy. It trades about 0.07 of its potential returns per unit of risk. Astra Energy is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  24.00  in Astra Energy on September 5, 2024 and sell it today you would lose (15.79) from holding Astra Energy or give up 65.79% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	30.51%
Values	Daily Returns

CEZ A S  vs.  Astra Energy

CEZ A S

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CEZ A S has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, CEZ A is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Astra Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Astra Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with CEZ A and Astra Energy

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

The idea behind CEZ A S and Astra Energy 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.